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TheChanging National Agenda 



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London • Sydney • Dover, New Hampshire 


In association with The Jerusalem Institute for Israel 

© 1986 Jerusalem Institute for Israel Studies 
Croom Helm Ltd, Provident House, Burrell Row, 
Beckenham, Kent BR3 1 AT 
Croom Helm Australia Pty Ltd, Suite 4, 6th Floor, 
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British Library Cataloguing in Publication Data 

Schweitzer, Avraham 

Israel: the changing national agenda. 

1 . Israel Politics and government 


I. Title 

956.94'05 DS126.5 

ISBN 0-7099-3382-7 

Croom Helm, 51 Washington Street, Dover, 

New Hampshire 03820, USA 

Library of Congress Cataloging-in-Publication Data 

Schweitzer, Avraham, 1923- 

Israel: the changing national agenda. 

Translation of: Mahpakhim. 

Includes index. 

1. Israel -politics and government. 2. Mifleget 
po’ale erets-Yisra’ el. 3. Likud (party) 4. Dayan, 
moshe, 1915- . 5. Begin, Menachem, 1913- 

I. Title. 

DS126.S3613 1986 320.95694 86-6220 

ISBN 0-7099-3382-7 

This publication was made possible by funds granted by the Charles H. Revson 
Foundation of New York to the Jerusalem Institute for Israel Studies. The 
statements made and the views expressed, are solely the responsibility of the 

Phototypeset by Sunrise Setting, Torquay, Devon 

Printed and bound in Great Britain by Mackays of Chatham Ltd, Kent 





1. Initial Successes 


2. Salvation in Blood and Fire 


3. Intermezzo: Into the Abyss 


4. Challenge and Conquest 


5. Transformations 


6. Towards the Next Changeover 








The Coming of Likud 

The defeat of the Labour government at the polls on 17 May 1977 
signalled an upheaval in Israeli politics. The overthrow of Labour is 
said to have produced a fundamental political change: the 
subjection of national priorities to a new central theme — the de 
facto imposition of state sovereignty over the entire area of western 
Palestine. A new governing coalition had come into being, the 
nucleus of which was the ultra-nationalist Herut Party 1 led by 
Menachem Begin. This was expected to be a long-term heir to the 
coalition headed by Mapai ( Mifleget Poalei Israel or the Palestine 
Workers’ Party), which had first led the Yishuv, the Jewish 
settlement in Palestine, from 1931 until the establishment of the 
state in 1948, and afterwards Israel for twenty nine years and two 
days — ever since that momentous Friday afternoon, 14 May 1948, 
when David Ben-Gurion proclaimed the rebirth of Jewish indepen- 
dence in the historic homeland. 

All this and more has been said about the upheaval; what has not 
been said, however, is that it came seventeen years too late. In 1960 
Mapai, Israel’s ruling party par excellence, ground to a halt, having 
more or less accomplished the programme it had set itself. An 
internal crisis tore the leadership apart in a matter of a few weeks, 
casting doubt upon the inner cohesion of the party and upon the 
authority of the man who then stood at the helm and guaranteed 
both its stability and the stability of its rule: David Ben-Gurion. If 
conditions had been ripe, that is to say, if Mapai had then faced an 
opposition capable of governing the country, the fifth Knesset 
elections in August 1961 might have brought about the party’s 
downfall and seen its national leadership replaced by that of another 
major party. 

That is not what happened. The axe stopped just short of Mapai’s 
head and the crisis passed, leaving the party much weakened. It split 
in 1965, and then in 1966 it had to face a profound economic 
recession during which 100,000 Israelis became unemployed. Bitter 
jokes became current, best summed up by the sign which was 


2 Introduction 

supposed to be hung at Lod airport, ‘Last one out, please turn off 
the lights’, hinting that Mapai’s overthrow was merely a matter of 
time. Just then, however, war broke out, ending in a shattering 
victory over the combined Egyptian, Syrian, and Jordanian armed 
forces. In its aftermath Israelis remained loyal to the government 
which had overcome the threat to national existence. The euphoria 
of victory, enhanced by the strange and enchanting atmosphere of 
the conquered territories on the West Bank, the Sinai Peninsula, 
and the Golan Heights, contributed to the restabilisation of the 
regime, despite the cost of retaining those territories, the primary 
cost being 492 dead and 1739 wounded between 12 June, 1967 and 3 
May 1972, when sporadic fighting with the Syrians ceased on the 
Northern Front. 

The Yom Kippur War once again shook the public’s faith in the 
government’s military superiority. Had the country not been beset 
by a deep shock following the surprise of Yom Kippur, it might well 
have settled accounts with its worn-out leaders in the elections of 31 
December 1973. However, once again they were granted a period of 
grace, another term of office. Under Labour Party leadership, the 
government which assumed power during the summer of 1974 tried 
manfully to cope with a legacy of accumulated failure and fatigue. 
Notwithstanding its brave fight against waste and corruption. 
Labour could no longer conceal the bankruptcy of its political 
programme, and, in the end, it was defeated. 

Nevertheless the results of the elections for the ninth Knesset, 
which brought Menachem Begin’s Likud to power with a convincing 
plurality (his list received 43 seats, as against 32 for the Labour list), 
were unexpected. In Basic Surprise 2 , a book dealing with the 
surprise of Yom Kippur, Dr Tswi Lanir distinguishes between two 
sorts of surprise: situational and basic. In the case of the 1977 
elections, the surprise was certainly basic. The rule of Mapai, and 
afterwards of the Labour Party or the Labour Alignment, had lasted 
so long — nearly 46 years if one starts from 1931, the year when 
representatives of the labour movement took over the main 
portfolios in the Jewish Agency Executive — that it seemed to be 
part of the natural environment, like the air, the sun, and the hills in 
the east. It is characteristic of basic surprises that they are not 
expected to occur despite manifest signs that they are impending; in 
other words, people refuse to believe their own eyes. That is what 
Lanir says in the case of the Yom Kippur War; that is also what 
occurred in the elections of 1977. 

Introduction 3 

Public opinion polls predicted the results during the months 
preceding the elections as follows: 

March 1977 

April 1977 

13 May 1977 












Dash (Democratic 
Movement for 




NRP (National 
Religious Party) 

2. 9-7. 5 

4. 1-7.4 


As election day drew nearer, the shape of the impending 
upheaval grew more evident. Labour was falling behind the Likud 
and the parties which were to prove the nucleus for an alternative 
coalition: the second column of the final opinion poll was right on 
target. None the less people were thrown into a state of shock 
mingled with disbelief at 11 p.m. on the night of 17 May as the 
television announcers began reading out results taken from sample 
ballot boxes, a forecasting technique used for the first time in Israel . 

The public at large was not alone in being surprised. Dr Eliahu 
Ben Elissar, one of Begin’s closest aides, said that he was not 
surprised by the results because they had been predicted by a public 
opinion poll. He added, however, that he and his associates had 
kept these results in strict secrecy because ‘We found it hard to 
believe them’. On the other hand, Micha Reisser, a Herut activist 
who later became a Member of the Knesset, placed his faith in the 
stars, claiming that he was not surprised because a fashionable 
astrologer had predicted the Likud victory. In the Labour camp the 
routine reaction was that ‘It’, meaning the loss of power, ‘could not 
be’. That night Shimon Peres told journalists that he had not 
expected the results, and that they were ‘a painful surprise’. 3 

Immediately after the elections various explanations began to 
surface as both private citizens and professional politicians tried to 
explain the political upheaval to themselves. Many people 
concluded that the main reason was a kind of systemic fatigue within 
the Labour Party, the result of 29 years of uninterrupted rule, or, 
rather, of 46 years of power. Others concentrated on specific issues 

4 Introduction 

such as the financial corruption in which members of the 
government and those close to them had been involved. Dr Minna 
Tsemach, who directed the public opinion poll mentioned above, 
stated that respondents did refer to the corruption charges brought 
against Asher Yadlin, the former head of the Histadrut Sick Fund 4 
and a candidate for the governorship of the Bank of Israel, saying 
that it had had a great deal of influence upon them and affected their 

Later on another explanation emerged. A more detailed analysis 
of the election results revealed that Likud reaped its greatest success 
among Oriental Jewish voters in the ethnic neighbourhoods of the 
major cities and in the development towns. Some people concluded 
that Likud had gained a sort of political monopoly (or at least a 
decisive advantage) among Israeli Jews of Asian and African origin. 
Others added that, since these voters were a majority of the popula- 
tion, and, moreover, a growing majority because of their higher 
birth rate, Likud had become the permanent majority party. To 
anticipate, the results of the 1981 elections were later seen as 
empirical proof confirming the analysis. 

If, however, one gives the matter further thought, it appears 
doubtful whether the upheaval of May 1977 is attributable either to 
corruption in high places or to the ethnic factor alone, or in 
particular. As for the opinion that the Labour Party was exhausted 
after 46 years in power, this too needs qualification. It was not 
merely or specifically the passage of time which had eroded the 
electoral appeal of the Labour Party. 

No-one can deny the harmful effect of the manifestations of 
systemic rot and personal corruption which came to light between 
1974 and 1977. Those who claim that it was corruption that brought 
Labour down concentrate on that period, in which it had become 
highly visible; however, it is unconvincing to attribute the upheaval 
of 17 May mainly to the scandals of the three years of Rabin’s 
premiership. The political change which took place after the 
upheaval was too far-reaching and the rejection of what had been 
achieved under Labour rule was too comprehensive to be attributed 
merely to the events of three short years. Moreover, the electoral 
results do not confirm the thesis that it was the rot and corruption in 
the government which eroded Labour’s electoral support. For it was 
the Likud which emerged victorious, not the Democratic 
Movement for Change, the party which advocated clean and 
efficient government and high individual moral standards. 

Introduction 5 

As for the ethnic factor, upon further reflection, far from 
explaining the results of the election, it seems to be part of the 
puzzle. In the past large numbers of Oriental Jews had supported 
Mapai and assured its consecutive victories at the polls. There were 
periods such as the 1950s when the residents of the immigrant 
camps, the new agricultural villages, and the development towns 
' had seen David Ben-Gurion as a messiah who had redeemed them 
from the exile of Ishmael. To the extent that they were subject to 
economic distress and feelings of wounded pride deriving from the 
destruction of their traditions and the severing of family ties — the 
factors today used to explain the ethnic tension which is said to be 
one of the identifying marks of Israeli society — at that time these 
wounds were much fresher and more painful. Poverty was more 
palpable — many immigrants literally went without their daily 
bread at times — as was the trauma of immigration and being cut off 
from an environment which had sustained and nourished the social 
fabric of the ghettoes from which the new immigrants came. Yet in 
that catastrophic period of mass immigration, when Jews from Asia 
and Africa — who, though desperately poor, still had maintained an 
orderly communal life which drew stability from the family 
hierarchy and from some sort of economic activity — were turned 
out of airplanes or ships straight into tents or asbestos barracks, 
when they barely earned a living from work to which they were 
unaccustomed, most of the imigrants still supported Mapai. Now 
their sons and daughters, far better off economically and probably 
culturally, were the ones who turned their backs on Mapai, 
manifesting a profound hatred for it and contempt for its achieve- 
ments. Was that phenomenon then so much to be taken for granted, 
so self-explanatory that it could be used to account for the upheaval 
or was it something which itself required explanation? 

Similarly, the metaphorical explanation that the Labour Party 
lost power because of ‘metal fatigue’ needs further examination. 
The impression created by that explanation is that in 1977 a party 
with a worn-out, broken-down old leadership went to the polls, a 
party whose strength had dwindled away during its decades in 
power. But the truth was quite different. The government in power 
at the time of the 1977 downfall was quite fresh and new in Israeli 
political terms: its leaders, the Prime Minister and the Ministers of 
Defence, Foreign Affairs, and the Treasury, had served in those 
offices only since June 1974, less than three years. The Labour 
Party, which was trounced on 17 May, was less worn-out physically 

6 Introduction 

and politically than any government under Mapai since the estab- 
lishment of the state; it was fresher and more of a new departure 
even than the government led by Levi Eshkol after the 1965 
elections, when Ben-Gurion and his followers were removed from 

Defining the National Agenda 

The average citizen of whatever country works for a living and 
supports his family: his own welfare, defined broadly, and that of his 
family are at the centre of his existence and activities. But in a 
democratic country like Israel the individual also lives and acts as a 
citizen, that is, as someone who has not only the right but also the 
obligation to influence the way in which the community is governed. 
The most common and simple reason offered for this is that the 
welfare of the individual is bound up with that of the community. 
(Some theorists argue that the one is derived from the other, but this 
is not the place to debate definitions. Nevertheless, it may be noted 
that a person’s views in his role as citizen comprise the same 
elements as his views as a private individual — his self-interest and 
that of the group closest to him. Because of that identity the trans- 
ition from a person’s opinion as an individual to his opinion as a 
citizen is so smooth.) The most stable and comprehensive organi- 
sation of a community of citizens is the state: the individual, in his 
role as a citizen, is meant to be an active partner, to the best of his 
ability, in forming an opinion as to what the state ought to do for the 
general good and how it ought to proceed. Members of the political 
community, i.e. organisations such as political parties and their 
emissaries in the government, or writers in the media, or scholars 
who deal in social issues, and the like, actively sift out current 
opinions: what is left in the sieve is public opinion. But that material 
is still too fluid: the party leaderships must further refine and 
solidify it, formulating it into proposals for a national agenda. That 
agenda will then guide the government. 

Naturally there is always more than a single proposal for the 
national agenda. But one is dominant: the one which is formulated 
by the ruling party (or the governing coalition) and guides it. This 
agenda also marks out the area within which discussion of public 
issues takes place. In other words, operational decisions are made in 
terms of that agenda which generally remains in force for a longer 

Introduction 1 

period than a single parliamentary term. 

The rule of certain parties is identified with a given national 
agenda. With the passage of time the national agenda guiding the 
government gradually and inevitably diverges from present require- 
ments: when that divergence reaches a critical point, the national 
agenda is replaced by another, sweeping the party identified with it 
into power. This is what happened, for example during the 1930s in 
the United States, when Roosevelt took power; and that is what 
happened in Israel on 17 May 1977. 


1. Initially conservative, militantly anti-socialist, anti-trade union, Herut has 
become in the last decade very much the party of the poorer classes, while retaining 
its uncompromising nationalist programme (e.g. total opposition to any territorial 
concessions in the West Bank). 

2. Tswi Lanir, The Basic Surprise: Intelligence in Crisis (Hebrew) (Hakibutz 
Hameuhad, Centre for Strategic Studies, Tel Aviv, 1983). 

3. See Ari Avneri, Hamapolet (The Collapse) (Hebrew) (Revivim, Tel Aviv, 

4. The Histadrut is Israel’s major labour federation, and its Sick Fund provides 
health care for the majority of the population. 



The War of Independence and the establishment of a state within a 
hostile environment naturally, as it were, led to the creation of a 
certain national agenda: the leading party in the ruling coalition and 
its leaders, in particular David Ben-Gurion, were easily identified 
with the needs and tasks which were the order of that day . The state , 
which seemed to be little more than a word written in the decision of 
the UN General Assembly of 22 November 1947 setting up the State 
of Israel, had to be defended. Borders had to be carved out. After 
effective sovereignty had been achieved by means of war, its institu- 
tions had to be installed and their functions defined, a system of 
legislature and administration had to be established, the armed 
forces, which had provided the nation with operational sovereignty, 
had to be organised, and so on. In short, sovereignty had to be given 
substance. Mapai, having prepared for the task of gaining 
sovereignty and providing its substance for the past seventeen 
years, became the governing party with no apparent effort and 
without having to reaffirm the legitimacy of its leadership: the 
national agenda and its operational programme, as defined and 
proposed by its leader, David Ben-Gurion, were accepted by the 
community as being one and the same thing. 

This is the background to the slogan ‘statism’ used by Ben-Gurion 
to sum up the national agenda as conceived by Mapai at the time. 
The identification of the party with the development of the new 
state did away with the distinction between the ruling party and 
Israeli sovereignty: having taken charge of the overall as well as the 
daily administration of the state, members of the party, or people 
close to it, blurred the boundary between the two. Given the 
practical identity of the objective needs of the new state and their 
perception by the party that had most adequately formulated the 
national agenda, the complaints voiced by Mapai’s political rivals 
about its near monopoly of leadership positions and its thirst for 
power seemed mere pettifoging: Mapai was the state. 


Initial Successes 9 

Immigration Policy 

We must now take a look at the first significant action taken by 
Mapai. Mass immigration to the new state almost entirely emptied 
certain places of their Jewish inhabitants: Bulgaria, Yemen, Iraq, 
and later on North Africa were all effectively cleared of their Jews. 
In deciding to encourage mass immigration, Mapai was influenced 
by memories of the Holocaust and by the sense that it had to rescue 
everyone it could from situations where physical destruction or total 
assimilation threatened. But pragmatic considerations, response to 
the needs of a state established in a hostile environment, also guided 
the Mapai decision-makers. The party leaders did not labour under 
the delusion that the War of Independence and its aftermath would 
reconcile the neighbouring Arab states to the new sovereign entity. 
The numerical disproportion between the population of Israel and 
that of the neighbouring countries after the war was certainly 
alarming. Security demanded the rapid population of the country. 
Assuming that empty territories invited infiltration, and, after- 
wards, renewed military attacks with overwhelming numerical 
superiority, the party leaders not only sought to throw open the 
gates, but also took every possible step to see that masses of immig- 
rants streamed through them. 

This decision on immigration was not the only option, and in 
some measure it contradicted positions taken in the past. The 
workers’ parties, headed by Mapai, had traditionally advocated 
selective immigration. Their attitude derived from their conception 
of the social and economic essence of the state in the making, and 
their fear lest it be undermined by masses of immigrants unprepared 
for the task of creating an independent society in a barren land 
devoid of the appropriate social and productive infrastructure. That 
was the position taken during the 1920s and 1930s with regard to 
immigration from Europe, towards immigrants with origins and 
culture similar to those who had already settled in Palestine to lay 
the foundations and erect the structures of a new Jewish society. 
Consequently it was even harder for the leaders of Mapai to decide 
to fill the land with masses of Jews from Asia and Africa. Although 
they were largely ignorant about the character of these Jewish 
communities, they probably anticipated that their absorption would 
pose problems with which even a well-established and firmly based 
society would find it difficult to cope. The first years of mass immig- 
ration showed that these apprehensions were not illusory: there was 

10 Initial Successes 

imitation, but no real cultural absorption. 

The Mapai leaders were not deterred, however, either by the 
difficulties of cultural absorption or by the economic realities of 
those years. It was already clear at the onset of mass immigration 
that Israel lacked jobs as well as a social infrastructure, especially 
housing, sufficient to absorb so many immigrants: within three 
years the Jewish population of the state doubled. The imbalance 
between what was available and what was needed, and the social 
grievances which they knew would accumulate among the new 
immigrants as a result of the difficulties of their economic absorp- 
tion, their poor wages and miserable housing, did not deter the 
Mapai leaders from deliberately speeding up immigration. They 
had realised that for Israel’s existence — existence and military 
security being synonymous in Ben-Gurion’s vocabulary — the rapid 
increase in Jewish population was a vital necessity. 

In these days of popular sociology, some people argue that the 
mass immigration was a plot on the part of the veteran residents of 
the country or, in another version tailored to fit up-to-date 
polemics, an Ashkenazi ruse. It is claimed that the Ashekenazis (the 
Jews of European origin and their descendants) asked their leaders 
to supply them with plenty of hewers of wood and drawers of water , 
deprived of them as they were by the flight of the Arabs. Mapai, or 
the veterans, or the Ashkenazis (depending on who is talking) saw 
the Jews of Africa and Asia as excellent substitutes for the Arabs, 
actually dual-purpose substitutes, for the immigrants would also 
supply cannon fodder in future wars against the Arabs. However, 
not only was there no evidence at the time of this line of argument 
among the veteran Jewish settlers or their leadership, but the 
immigrants themselves, especially those who might have seemed 
destined by nature to be hewers of wood and drawers of water, did 
not fulfil these expectations. In short, although a brief exposition 
cannot do full justice to the facts, it can be said that, during the early 
years of their absorption, the new immigrants put a heavy economic 
burden upon the veteran community (see Table 1.1). This view is 
supported by personal memories of those days, and further by the 
record of the desperate efforts on the part of the government to 
obtain outside assistance: a loan from the United States, the release 
of sterling reserves by the British Government, the establishment of 
an organisation for raising development loans (Israel Bonds), and 
the like. These efforts were accompanied by the imposition of a 
stringent rationing system in the country, and by high unemploy- 

Initial Successes 1 1 

Table 1.1 Jewish Population 1949-52 





Jewish population (in millions) 
attheend of the year 





Average Jewish population 





Number seeking work* 

(in thousands) 





* Those employed in make-work are not included among those seeking 

merit, with the unemployed dependent on the state. Later on, 
David Horowitz, Israel’s senior economist at the time, was to recall 
that there were days when the ability to pay for one more shipload of 
wheat spelled the difference between continued existence and 
hunger, pure and simple. 

After ten years of stewardship Mapai, or, to use a practically 
synonymous term, the national leadership, could look back with 
satisfaction: it had done a good job, measured by the standards 
generally applied to governments, and particularly to those of 
developing nations following the ground-rules of democracy. At 
any rate, that was the judgment of the people: in the elections for 
the fourth Knesset in 1959, the party, campaigning under the 
slogan, ‘Say “Yes” to the Old Man’ (meaning Ben-Gurion), received 
additional seats. 

After it had won 46 seats out of 120 in the elections for the first 
Knesset (also called the Constituent Assembly), Mapai declined to 
40 seats in the third Knesset, elected in 1955 . But in the elections for 
the fourth Knesset in 1959 it rose again to 47 seats, nearly 40 per cent 
of the house, a record number. This was the prize for past perfor- 
mance, however: during the first decade of Israel’s existence two 
wars were fought and won, a national economy was created virtually 
from scratch, and the number of immigrants absorbed totalled twice 
the original population. Had the voters been able to predict the 
future, the results might have been different. Had the public 
perceived the wasting erosion of ten years in power scarring Mapai 
and its leadership, it would have awarded certificates of outstanding 
achievement to those who had done such great things, but it would 
have seen that they were no longer fit to rule. The party programme 
had lost its momentum, and the leadership had failed to renew the 
national agenda to make it appropriate for the changed conditions 
prevailing after ten years of Mapai stewardship. 

12 Initial Successes 

The Lavon Affair 

The crisis which exposed the mistake was ‘the Lavon Affair’. In May 
1960 the General Secretary of the Histadrut, Pinhas Lavon, asked 
Ben-Gurion to have him cleared from an accusation which had 
never been made. Six years earlier an inquiry commission, 
consisting of the President of the Supreme Court, Yitzhak Olshan, 
and the former Chief of Staff, Yaakov Dori, had found that on the 
evidence presented to it it could not determine who had ordered a 
Jewish underground group in Egypt to commit certain acts of 
sabotage; was it Pinhas Lavon, who was then the Minister of 
Defence, or was it the chief of military intelligence, Benyamin 
Guibli? As a result of their own inquiry prior to the establishment of 
the commission of inquiry, and discussions after the commission 
had finished its work, the Mapai leadership forced Lavon to resign. 
Now, in May 1960, he demanded that he be cleared of the allegation 
that it was he who had ordered the underground network to take 
actions which led to a tragic outcome. The common explanation for 
this move is that Lavon calculated that , if he were cleared , he would 
have a reasonable chance of becoming the candidate for the party 
leadership and, considering the practically automatic identification 
between the two, for the premiership if and when Ben-Gurion 
retired for reasons of age. The latter rejected the request, arguing 
that since he had not brought the charge against Lavon, he could not 
exonerate him. Instead, he proposed a judicial inquiry commission 
as the best way to investigate the matter and rehabilitate Lavon, if 
that followed from the commission’s findings. 

Within a few weeks, the controversy between the heads of the two 
great institutions of Israeli life, the government and the labour 
federation, the Histadrut, had split public opinion, once more 
demonstrating the particular status of Mapai in the public mind: the 
rivals were both Mapai leaders, but an internal party conflict was 
perceived as a subject of the greatest importance for all the 
country’s citizens. The controversy quickly turned into a total 
confrontation, gradually assuming the proportions of a civil war 
within the country’s leadership. The struggle paralysed the 
government and ultimately brought it down, forcing new elections 
two years before the end of the legal term. 

Here one should note that the struggle within Mapai did not have 
the character of a struggle between two bureaucracies, i.e. the 
government versus the Histadrut. On the contrary, the split did not 

Initial Successes 13 

follow organisational divisions. In the course of the conflict many 
party leaders within the government went over from Ben-Gurion’s 
to Lavon’s camp. The intramural struggle assumed the charac- 
teristics of a systemic crisis, revealing cracks in the regime’s founda- 
tions. Senior party representatives resorted to strong language, 
describing their own party’s rule as a regime of intimidation and 
'deceit whose leaders were preparing mass graves for each other. 

Some years previous to the Lavon Affair, Mapai had been shaken 
by another controversy which erupted between Prime Minister 
Ben-Gurion, and the Minister of Foreign Affairs, Moshe Sharett 
(who had been Prime Minister from 1954 until the elections for the 
third Knesset in 1955). This controversy did not revolve around the 
possible responsibility of one of the two men for an action taken 
long ago, nor yet around their fitness to hold governmental office. 
Rather it concerned a matter which, at the time, must have seemed 
vital to all concerned: the question of war and peace, or, more speci- 
fically, the proper response to Egypt’s closure of the straits of the 
Red Sea to Israeli shipping and to the threat to internal security 
posed by Arab infiltrators operating from the territories, and under 
the protection, of Egypt and Jordan. Ben-Gurion emerged 
victorious from this controversy, and exploited his victory, among 
other things, to get rid of Sharett, a well-liked leader who enjoyed 
considerable support within Mapai. But although the dispute 
between the two leaders, ending with Sharett’s dismissal, had 
shocked Mapai deeply, it was characterised by great self-restraint, 
no attempt being made to involve outside factors while it lasted nor 
after its conclusion. 

The difference between the two affairs is conspicuous. On the one 
hand, a powerful rivalry between two leaders on a subject bearing 
directly on the security of the country was dealt with by the party 
without upsetting its leadership or procedures, and, in contrast, a 
struggle between two leaders of the same party on a subject of a 
strictly personal nature with which it could not cope on its own, and 
therefore had to involve both the opposition and the public to 
determine the outcome. 

Various explanations come to mind. One is that Ben-Gurion had 
grown old and that the time had come to put him out to pasture. 
Alternatively it is possible to attribute the eruption of the 1960 affair 
to a public grown sensitive to injustice, whereas in 1956 the 
discussion took place behind closed doors, masked, among other 
things, by military censorship. However, Ben-Gurion was no 

14 Initial Successes 

youngster in 1956 either, and it will be recalled how the party 
actually sought the voters’ support with the slogan reminiscent of 
totalitarian countries: ‘Say “Yes” to the Old Man’. And if one 
examines the other hypothesis mentioned above, one finds that it 
turns into a question in its own right: why did the party agree to 
involve the public in the Lavon Affair, and on the initiative of a 
growing number of its own members, in 1960, and why did it not 
involve the people at large in 1956, despite the far greater gravity of 
the question in dispute? 

The answer which suggests itself, although it cannot be proved 
analytically, is that in 1956 the matter in dispute appeared to be the 
main issue, not the personalities involved in it. Conversely, in 1960 
the matter itself was trivial, concerning, as it did, the personal status 
of the antagonists. The struggle between Ben-Gurion and Sharett 
befitted a party absorbed in its appointed task, the implementation 
of a national agenda which was widely agreed upon and acceptable 
to the loser and his supporters too. Conversely, the struggle 
between Ben-Gurion and Lavon took place in a party which had 
achieved its goals and thus no longer had much left to do apart from 
administering past gains. In brief, in 1956 Mapai was a party in mid- 
course, on the way towards full implementation of the national 
agenda. In 1960 it was resting on its laurels with no other goal but to 
stay in power, bereft of direction and drive. 

This is not the place to examine the 1960 affair in detail. Suffice it 
to note that within a short time it developed into a full-blown 
scandal, even though the secondary disputants who joined one side 
or the other made valiant efforts to give it what it lacked: substance 
sufficient to justify the public uproar. Justice and truth did not 
depend, despite the claims voiced by Ben-Gurion and his followers, 
on whether or not a judicial inquiry commission was established to 
examine what had happened in 1954, or whether Levi Eshkol’s 
manoeuvres (see below) were permissible politics or a subversion of 
proper procedures. On the opposing side it was argued that accep- 
tance of Ben-Gurion’s demands meant the abandonment of 
democracy and submission to the desire for vengeance or the 
tyranny of an ageing dictator. However, the moral rosewater with 
which the two sides so liberally besprinkled themselves could not 
hide the stink wafting up from the scandal. In 1960 Mapai had 
basically completed the task of implementing the national agenda it 
had set for the country, and it was left without a mission or even a 
sense of one. Only its instinct for power, an essential element in its 

Initial Successes 15 

ability to guide the nation, remained strong, twisting the party into 
a caricature of itself even in the view of many of its leaders and 

This may serve to explain a phenomenon which had hitherto been 
unknown in Israel: public alienation from the national leadership, 
which took the form of widespread hatred of Ben-Gurion, the 
pepsonal embodiment of Mapai and its rule. The most conspicuous 
expressions of that alienation were found principally in the 
academic community, many of whom were Mapai supporters or 
even activists. Nevertheless, these alienated members of the intel- 
ligentsia, who possessed the intellectual capacity and professional 
knowledge to make out the widening gap between pretensions to 
office and its actual justification, the ability to formulate a new 
national agenda, instead became obsessed with the most superficial 
manifestations of the Lavon Affair. The personal injustice which 
had allegedly been done to Lavon was placed in the centre of the 
public stage and became the cynosure of all eyes. It seemed as if 
Israel’s collective intelligence, as represented by the best educated 
of its professional intelligentsia, had taken an extended leave of 

One wonders how it was that, although Mapai had exhausted its 
programme and its leadership had demonstrated their bankruptcy 
during the Lavon Affair, the party did not lose power. In fact, in the 
elections following Ben-Gurion’s resignation from the premiership 
no significant changes took place. The elections for the fifth Knesset 
in August 1961 did bring a reduction in Mapai’s electoral strength 
from 38.2 to 34.7 per cent; but it remained the leading party, and it 
formed the government. Mapai’s two traditional rivals, the General 
Zionists and Herut, increased their strength, but not sufficiently to 
justify an effective claim to form a government of their own. 

Here we find a refutation of the general argument that in democ- 
racies people vote against the government and not for the opposi- 
tion. Although the Mapai leaders and the rank and file had jointly 
done their utmost to reveal the weaknesses and even corruption at 
the top, no change took place in the line-up for the 1961 elections. 
The party was saved from the electoral defeat it richly deserved 
because of the inability of what was known as the bourgeois oppos- 
ition, Herut and the Liberal Party, to put forward an alternative 
national agenda and a credible leadership to implement it. It would 
take another sixteen years before the public drew effective conclu- 
sions from what had begun to be evident at the end of the 1950s, 

16 Initial Successes 

namely, that the party whose energy had vitalised the first ten years 
of independent statehood had shot its bolt, retaining only the 
practical ability and experience needed for routine administration. 

Rise of the Opposition 

Since the mid-1950s an internal opposition had been growing within 
Mapai, centred around the younger party members. These young 
men demanded appropriate positions of power in the party and its 
subsidiary organisations, in the government, the Histadrut, and 
economic organisations: in other words, they launched a personal 
challenge based principally on the claim that they were more 
effective and energetic workers. Moreover, towards the climax of 
the crisis within Mapai, some of the more prominent of the young 
party members expressed reservations about the party programme 
itself. These reservations remained fragmentary, however, and a 
fully worked out alternative to Mapai’s traditional national agenda 
never emerged from these circles. The veteran party members 
quickly discerned this weakness: in their defensive campaign to 
preserve their positions of power and the material benefits and 
social prestige derived from them, they repeatedly asked what 
substantive reform the pretenders proposed. That question 
remained without any convincing response. 

Moshe Dayan was prominent among the younger men. Endowed 
with great leadership qualities, a cruel charm, bright, sure of 
himself, and always iconoclastic, upon his entry into political life in 
1958 Dayan launched an attack against the Histadrut and its claim to 
a quasi-governmental status. Later on, in 1963, having served as 
Minister of Agriculture in Ben-Gurion’s last cabinet and having 
resigned from that of Levi Eshkol because he had not been 
promoted to a more important ministry and had also been deprived 
of influence on defence matters, though he had been Chief of Staff 
during the Sinai campaign of 1956, he declared: 

Degania, Ain Harod, or Nahalal [among the veteran co- 
operative agricultural settlements] no longer symbolise the vital 
centre or the problems of our national existence. Today towns 
such as Beersheba, Ashdod, or Dimona [the new development 
towns] are the ones which do. 

Initial Successes 17 

Dayan’s criticism, and the demand for a change in social emphasis, 
was quickly seized upon by the old guard as a denial of the basic 
organisational and ideological tenets of Mapai. It derived from an 
intuitive grasp of the shift that had taken place in the centre of 
gravity of Israeli society. No longer was Israel the society in which 
the Histadrut and the co-operative settlements had grown up and 
been consolidated, and on which the newly established state had 
depended to provide the foundations of the government and the 
economy. Now electoral power was concentrated in the cities 
populated by immigrants, most of whom had no personal memory 
of the great years of struggle against the British mandate and the 
supreme efforts invested in establishing, consolidating, and 
defending the state. 

The theoretical distance from Dayan’s declaration of 1963 to the 
Likud election victory in 1977 was a mere step. But Dayan, as 
happened so often in his eventful career, failed to draw the proper 
conclusions, perhaps because of his inability to bridge the gap 
between occasional insights and political synthesis, perhaps because 
in his heart of hearts he doubted the validity of his own observa- 
tions, or perhaps because of his unconscious refusal to divorce 
himself and his political ambitions from the historical elites of 
Degania and Nahalal from which he had sprung and which he 
represented to the end of his life. At any rate, neither then, in the 
late 1950s and early 1960s, nor later did Dayan propose an 
organised programme in which the rejection of the political claims 
of the traditional holders of power was complemented by a fully 
fledged alternative. 

Shimon Peres was the other prominent representative of the 
young guard, and a pioneer of modern industry in Israel. He 
discerned another aspect of the widening gap between the national 
agenda identified with Mapai rule and the models for development 
acceptable to it, on the one hand, and the requirements arising from 
a national existence in a hostile environment and in a world under- 
going swift technological innovation, on the other. At that time 
Peres was instituting revolutionary technological changes within the 
closed realm of the defence industry. But, busy as he was at the 
Ministry of Defence, he also made an ambitious attempt to set out a 
political platform in a letter sent to Prime Minister Levi Eshkol, in 
response to his provocative question, ‘What do you [young men] 
really stand for?’ 

Like Dayan, Peres also placed the development towns at the 

1 8 Initial Successes 

centre of his social conception, or, to quote his letter, ‘One must 
raise the development towns ... to the level of a valued and prized 
possession of the movement'. This was to be done in the knowledge 
that ‘we are living' in what he called a ‘mass society’. The old social 
elite was weary, according to his analysis, and had turned into an 
ossified, conservative class. New energy was to be generated by 
infusing the national elite — i.e. , the Labour Movement — with the 
strength of masses of immigrants living in the development towns. 
But the party also had to plot a new economic course: yesterday’s 
agriculture and industry could no longer support those employed in 
them and provide them with a decent living. A new industry had to 
be developed, that is, an industry which could compete in the 
modern world. Peres therefore proposed that the party should 
prepare a national programme, ‘Not a departmental, but a 
movement programme, in which the entire nation will be partners’, 
as he put it. Industrial development would be central to it, and 
‘modern industry is preferable, embodying the last word in technol- 
ogy’ • 

However, in political terms, the initiative of Dayan and Peres 
came too late. In the view of the veteran Mapai leaders, the two 
younger men merely seemed to be rebelling against the accepted 
tenets of the movement. The veterans suspected that the promotion 
of new ideas was merely a cover to disguise the younger leaders’ 
attempt to supplant them either with the aid of modern rhetoric or 
by simply denying their right to rule as the legitimate heirs of the 
founding generations. Had Dayan and Peres put forward their ideas 
immediately after the Sinai campaign of 1956, when the country was 
caught up in a wave of rapid development, the results might have 
been different. But the opportunity was missed; Mapai lost the 
chance to renew its mandate and to provide a vision for the nation, 
thereby reasserting its claim to another period in power. 

During the first half of the 1960s the Israeli public lost its 
childhood illusions. The 1950s had been years of great creativity: 
the state was established, about a million immigrants were 
absorbed, the country’s security was maintained by the Israeli 
Defence Force, which had to prove its mettle in action against infil- 
trators and during the Sinai campaign. The national economy also 
expanded sufficiently to support the growing population and 
showed signs of increasing ability to make use of contemporary 
technology. Thus the Mapai leadership had implemented the 
agenda which it had taken up after the War of Independence. Then, 

Initial Successes 19 

in the early 1960s, the machinery started to idle, chiefly propelled by 
the momentum of its earlier drive. With the removal of Ben-Gurion 
the leadership became simply an executive, though it is probable 
that Ben-Gurion’s continued presence would have made no differ- 
ence. His fall did not cause the exhaustion of the national leadership 
for which he stood; it was rather the result of that exhaustion. 

The New-Old Regime 

Many people thought that new men in positions of national 
leadership would be sufficient to consolidate a fresh national 
agenda and restore the creative drive which had uniquely marked 
the previous ten years; however, the Eshkol period proved they 
were mistaken. The public wanted the new team presented by 
Mapai to succeed: the 1965 elections restored almost all the 
parliamentary power enjoyed by the party at its peak in 1959. But 
even sooner than in 1959 the public realised it had struck a bad 
bargain: the ‘new-old’ leadership confounded it with the worst 
economic crisis Israel had known since its establishment. 

It is possible to explain the recession of 1966 in Keynesian terms, 
such as reduction of the government deficit in order to combat infla- 
tion, lack of sufficient awareness within the government 
bureaucracy of the need to forestall unemployment by promoting 
investment in the infrastructure, and so on. However, the cause lay 
deeper, namely in the leadership’s loss of direction. It proved 
incapable of providing an appropriate national agenda for the 
period of calm after a decade of civilian construction and military 
reinforcement. There was a sense of stagnation accompanied by a 
loss of faith and a reduction of economic momentum both at the 
governmental and at the individual level. With a complete lack of 
public trust and private vigour, unemployment and a spirit of 
resigned hopelessness spread like wildfire. In a period of worldwide 
economic expansion, Israel alone was bogged down in a recession: 
about ten per cent of the work force became unemployed. As a side 
effect, macabre jokes became widespread, which both expressed 
the public’s pessimism and exacerbated it. Most of them were at the 
expense of the Prime Minister, Levi Eshkol, although just a year or 
two before he had been the object of admiration for having freed the 
country from the tyranny of David Ben-Gurion. The jokes focused 
on his inability and impotence — mistakenly, as it happens, since he 

20 Initial Successes 

was neither the guilty party nor chief among those responsible for 
the loss of the dynamism of the 1950s. 

The Mapai leadership could not fail to be aware of these public 
attitudes. Even before the economic crisis, while the party leaders 
were still busy with the political struggle which culminated in Ben- 
Gurion’s removal from the leadership, they were scanning the 
horizon for a cure. Since they were firm believers in the power of 
organisation, they sought an answer to the lack of substance in their 
programme in the expansion of their organisation. Eshkol’s negoti- 
ations in 1961 for the purpose of creating a new government, still to 
be headed by Ben-Gurion, were the start of the acute stage of the 
crisis which engulfed the veteran leader. During these negotiations 
Eshkol discovered that Ahdut Haavoda, which had split off from 
Mapai in 1944 and had combined with Hashomer Hatsair (an even 
more left-wing party) to form the United Workers Party 1 but had 
separated from it in 1954, was now prepared to return to the fold 
and form a permanent partnership with Mapai. There had been 
signs to this effect even before, particularly since, during the 
leadership crisis, the leaders of Ahdut Haavoda concentrated their 
criticism on Ben-Gurion personally. Some of Eshkol’s actions 
between 1961 and 1965, while the groundwork for Ben-Gurion’s 
removal from Mapai was being laid, were guided by his own desire 
and that of his supporters to create conditions which would allow for 
the establishment of such a partnership — the New Alignment, as it 
was then called. The aspirations of Eshkol and his supporters were 
fulfilled by the broadening of Mapai’s institutional basis — its 
reunification, as it was claimed at the time. The Mapai leaders had 
long yearned to heal the rift of 1944, and Eshkol’s group sought to 
provide a response both to Ben-Gurion, whose fate was being 
sealed in the hearts of his comrades, and to the public who felt that 
the Palestine Workers 1 Party had ceased to offer a promising vision 
to the nation. 

Did Eshkol and his associates act instinctively in turning to Ahdut 
Haavoda, or did they do so on the basis of standard practical consid- 
erations? The answer to that question does not bear directly on the 
present inquiry. What is relevant, however, is that by turning, in its 
hour of need, to Ahdut Haavoda, Mapai blocked the way for the 
establishment of a coalition with the centre right. Thus, even before 
the 1965 Knesset elections, the General Zionist Party felt obliged to 
set up and formalise a partnership with Herut and establish the 
electoral alliance, Gahal, the basis of today’s Likud, which offered 

Initial Successes 21 

an alternative national agenda and eventually captured the govern- 
ment. Therefore, in a sense the tactical moves made by Eshkol and 
his comrades in the early 1960s paved the way for the political 
upheaval of 1977. Apparently Eshkol did not see things in terms of 
a choice between two types of coalition, one on the left and one on 
the centre-right. He sought rather to create an organisational and 
quantitative substitute for the lost substance of his own party. In a 
certain sense — even though by turning to Ahdut Haavoda he was 
turning leftwards — the step was appropriate; it was a step towards 
the hard core of the kibbutzim affiliated to Ahdut Haavoda to 
which, for historical reasons, the leaders of Mapai attributed 
ideological and moral vitality. They had felt the loss of that vitality 
in their mass party keenly; thus the partnership was intended to help 
Mapai not only by increasing its numbers but also by developing a 
new political message. Nevertheless, it was still a strange move: in 
order to give substance to a party of the 1960s, Eshkol sought the 
help of those who had provided it during the 1920s and 1930s. 

A Definition of Mapai 

At this point a brief digression is appropriate in order to classify the 
national agenda associated with Mapai in political science terms. 
Since Mapai defined itself as a socialist-Zionist party, it is generally 
assumed that the party was what it said it was: Zionist in its striving 
for a sovereign Jewish state, socialist as to the internal arrangements 
of that state. However, upon closer examination, this conclusion 
appears at least partly doubtful. 

It should be noted that during the 1950s the term ‘Zionism’ was 
synonymous with empty, pointless rhetoric. This derisory use of the 
term grew from general experience. Although the first tenet in the 
Zionist credo was the desire to immigrate to the Land of Israel of 
one’s own free will, only a minority of those who actually came to 
the country after the establishment of the state were Zionists in that 
sense. Some were displaced persons who in fact had nowhere else to 
go; others were uprooted from their countries of origin and brought 
to Israel because of a decision made by the Israeli Government. 
Neither group immigrated of its own free will; they were brought to 
Israel because other people, who had already implemented their 
own Zionist beliefs, wanted them to come. Thus the power and 
effectiveness of the Zionist element of voluntary immigration in the 

22 Initial Successes 

ideological armoury of Mapai seemed dubious during the 1950s, 
especially when one recalls that, in the minds of the leadership, 
bringing Jews to Israel was at least partly a response to the need to 
fill the empty spaces left by the mass exodus of the Arabs during the 
War of Independence. 

As for Mapai’s socialism, that may be judged by the results of its 
stewardship during the first decade of the state. Certainly the 
number of so-called socialist islands among the agricultural settle- 
ments increased greatly, as did their population and their economic 
power. At the same time , the Histadrut enterprises such as Koor (an 
industrial investment and management group), Solel Boneh (a 
construction company), and Hamashbir Hamerkazi (a chain of 
retail and wholesale distributors) also grew in strength. However, at 
the end of the period, principally owing to the activities of Pinhas 
Sapir, who had been made responsible for industrial development 
in 1955, the scope of private enterprise was substantially 
broadened. Moreover, this did not simply happen: the party 
advocated a mixed economy, and when Sapir recognised that the 
private sector was missing, he endeavoured to create it, principally 
by using government funds which were distributed freely. 

Socialists normally distinguish between the need for establishing 
welfare institutions such as the Histadrut Sick Fund or the National 
Insurance Institute, on the one hand, and the deliberate redis- 
tribution of national income by the government to secure social 
equality, on the other. Similarly, they accept the distinction 
between the struggle for increased income and improved working 
conditions as a goal in itself and the process known as the class 
struggle , the purpose of which is to prepare the ground for the social 
control (either governmental or co-operative) of the means of 
production. On May Day, 1949 Golda Meir proclaimed that her 
party aspired to ‘Socialism in our time’, and she was certainly 
referring to something other than the mixed economy and the social 
welfare institutions which then existed. But in fact Mapai did very 
little to change the character of the economic regime for the benefit 
of the workers, apart from giving them political control over certain 
capital resources. At the end of the 1950s and in the early 1960s a 
profit-oriented entrepreneurial class began to emerge, professing 
managerial norms, and this took place under the auspices of govern- 
ments led by Mapai, and even with their explicit encouragement. 

Therefore, if one is to judge from behaviour and the intended 
effects resulting from it, one can define the national agenda which 

Initial Successes 23 

guided Mapai’s actions during the first decade of the state not as 
Zionist-socialist but rather as settler-statist. To the extent that there 
was a difference between self-definition and actual behaviour, it did 
not appear to concern either the party or its leadership. Everyone 
was too busy with high priority activity to bother with precise self- 

The tension between the aspirations of the practical members of 
Mapai, who sought a cure for their party’s loss of direction and the 
crumbling of its organisational structures, and the yearnings of the 
Labour intelligentsia for the rekindling of ancient inspiration, is 
clearly set out in a long article by Yitzhak Ben- Aharon, ‘Change 
Before Disaster Strikes’, published in Lamerhav in January 1963. 
The author points out that there had been far-reaching ideological 
agreement among the workers’ parties, but that they had been over 
loyal to existing institutions; ‘First the substance gave rise to a 
framework, but now the framework has outlived the substance’. In 
practical political terms, this was a positive response to the quest of 
the Mapai leadership to breathe new life into a regime which had 
already accomplished the better part of its own platform, and to 
restore its power by strengthening it organisationally. Moreover, 
Ben-Aharon suggested that the mere joining of Mapai and Ahdut 
Haavoda in the New Alignment would be insufficient, and he 
demanded that Mapam, the United Workers’ Party, 2 be included as 
well, thus calling for the ‘reunification’ of the labour movement. To 
those who asked how that would be possible in view of the chronic 
differences of opinion, the long history of controversies over princi- 
ples, and the organisational rivalries among the prospective 
partners, he responded not only by denying the importance of 
separate organisations, but also with a colourful definition of 
substantive issues: ‘Our homes are full of carrion and broken 
crockery, and that refuse smothers our spiritual life’. 

In Ben-Aharon’s opinion, the government headed by Mapai, but 
which included members of Ahdut-Haavoda and Mapam, had not 
carried out a socialist national agenda. The social institutions which 
grew up under Mapai rule, products of a working-class background, 
were left over from the pre-state period: the kibbutzim and co- 
operative agricultural settlements in general, the Sick Fund, and the 
business enterprises owned by the Histadrut. What was created 
after the founding of the state had not prevented social and 
economic corruption and had perhaps even hastened the process. 
Ben-Aharon did not couch his criticism in Marxist terms, nor did he 

24 Initial Successes 

make use of the sociological terminology current in public discus- 
sions during the period of the Mandate and the first decade of the 
state, such as ‘statism’, and ‘colonising regime', to define the 
character of the national agenda. However, his opinion of the 
substance of that agenda was implicit in what he advocated to 
replace it and in what he prescribed for the reformed Labour 
movement. This was an agenda which could properly be termed 
socialist, and the author summed it up as follows: freezing the 
income of half the population; immediately raising the income of 
the poorest quarter of the population; and reducing the income of 
the quarter of the population with the largest share of the national 

The socialism implicit in this national agenda exhibited two main 
features: the use of the state authority available to the reformed 
Labour Party in order to implement it; and its pronounced redis- 
tributive character — class struggle would be conducted by the 
government for the purpose of improving the lot of the poorest 
quarter of the population. Eight of the sixteen clauses proposed by 
Ben-Aharon were thoroughly redistributive in character, and on 
the basis of this national agenda he predicted ‘enormous, renewed 
impetus to ensure the creative and pioneering character of the 
economy and the state’. 

The arguments put forward in its favour are the most interesting 
feature of the proposed redistributive programme. In Ben- 
Aharon’s article there is no shortage of expressions of hostility 
towards the rich and those who profit at the expense of their fellow 
citizens, especially those who get rich on public funds, but one finds 
precious little evidence of the author’s awareness of social exploi- 
tation in the Marxist sense, or of sympathy with the weak and the 
oppressed. Nor is his major proposition framed in socialist class 
terms. It is actually state-oriented, focusing on the necessity of 
freeing Israel from dependence on foreign aid, which, in Ben- 
Aharon’s opinion, has distorted Israeli society by causing it to lose 
its pioneering character. This argument appears in the very first 
clause of his programme of action, where he writes: ‘At the end of 
the first half of the ten year plan, no more foreign aid or assistance to 
improve the standard of living of the Israeli population will be 
requested. Israel will have a positive balance of trade, [excluding] 
long range investment in development and defense.’ The purport is 
clear: ‘The net deficit . . . will be decreased annually by increasing 
exports, and whatever is not obtained through exports will have to 

Initial Successes 25 

come out of consumption and personal services and from 
government administration’. In conclusion, for such a programme 
to be implemented, Ben-Aharon argues that ‘it must bear the stamp 
of severity, of austerity, of limited consumption, and of living by our 
own efforts’. 

Thus the message of Ben-Aharon’s essay was first that he 
approved of the efforts invested by the Mapai leadership in 
enlarging the organisation under its control by grafting onto it 
another party or parties, its neighbours on the political map. 
Second, he also grasped what Eshkol and his friends had not, 
namely that an enlarged organisation would not necessarily attract 
more electoral support. For an expanded party to maintain itself in 
office, it would have to offer a new national agenda to the electorate 
in place of the one which was no longer attractive because it had 
essentially been implemented already and the social thrust of which 
had exhausted itself along the road from the Yishuv to the state. 
Ben-Aharon was certainly aware that at that time Mapai and the 
other labour parties under its wing were undergoing a crisis of 
depletion. That crisis was not, essentially, a personal one afflicting 
only the Mapai leadership, but rather a party crisis, or, if you will, 
the crisis of an entire political movement which no longer had a 
rationale for holding power. 

The answer which Ben-Aharon offered to this basic problem may 
be described as an injection of positive socialism into the state. The 
state, activated by immigration and the construction of a broadly 
based economic infrastructure and productive superstructures 
during its first ten years, was now called upon to concentrate its 
efforts on two goals which had been neglected or ignored: a radical 
redistribution of national income and wealth, and a freeing of the 
economy from dependence on foreign aid, at least for current 
consumption. In proposing these two goals, Ben-Aharon married 
state sovereignty with redistributive social policy, both of which 
were meant to restore the drive to the ruling parties which adopted 

Only Ben-Aharon’s organisational proposals were found accept- 
able. At the end of a process marked by many sudden reversals and 
crises, the labour movement was united. However, his substantive 
proposals, which were intended to satisfy the needs of a large 
portion of the population, were rejected. The social dynamic 
tended towards an increasingly bourgeois way of life, harvesting the 
fruits of one’s labours: the idea that after ten years of strenuous 

26 Initial Successes 

effort and war — not to mention the Holocaust in Europe and the 
social catastrophe of mass immigration — people would have to face 
another decade of ‘severity, austerity, and limited consumption’ 
was unacceptable. When a party emerged whose principal social 
message was that the right moment had finally come, Ben-Aharon’s 
pessimistic forecast materialised, for as he had foreseen a religious 
right-wing coalition was lurking outside the gates. 

Ethnic Discrimination 

In order to understand the Israeli political process, it is important 
to note that aside from a single exceptional instance, the 
problems and issues of immigration and of immigrant groups 
have not, in fact, been a central issue in the political struggle at 
the party level. 

These words were written by Professor Shmuel Eisenstadt in his 
book, Israeli Society , Background, Development, and Problems , 3 
the second Hebrew edition of which appeared in 1973. The book 
covers its subject up to 1965, and when it was first published, 
Eisenstadt, one of Israel’s most prominent sociologists, had no 
reason to fear that his students and colleagues at the Hebrew 
University would challenge his conclusion. This was still the case 
when the second edition was published, six years later. However, it 
is doubtful whether today, looking back from our present vantage 
point, the author would be tempted to write as he did, although in 
point of fact his words were true of the period to which they 
referred. Today absorption and ethnic origins are matters of great 
concern both to the public and to the government, and they are the 
focus of the political debate. During the 1950s and the early 1960s 
this was not the case, and it is noteworthy that in the catalogue of 
social problems presented in Ben-Aharon’s article, the question of 
ethnic groups, or, to use the rather tired slogan, ‘ethnic discrimina- 
tion’, does not appear at all. 

The ‘exceptional instance’ mentioned in Professor Eisenstadt’s 
book took place in mid July 1959, and the timing, five months 
before the elections to the Knesset, clearly helped to veil the 
message which emerges from it. A resident of a Haifa 
neighbourhood known as Wadi Salib, described afterwards as a 

Initial Successes 27 

well-known drunkard, caused a disturbance and was wounded by 
the policemen who came to arrest him. About a third of the 
residents of that poor neighbourhood — afterwards the newspapers 
reported that living conditions there were not among the worst in 
the country — had been immigrants from North Africa. A number 
of them then formed a group which staged a riot in Hadar 
Hacarmel, a more affluent neighbourhood, during which store- 
windows were broken and automobiles turned over and burned. In 
short, they staged an early version of the violent demonstration, a 
phenomenon which subsequently became a not particularly 
shocking news item in Israel. In the following few days, reporters 
discovered that a group calling itself the ‘Union of North African 
Immigrants’ was behind the riot, which goes to show that while the 
event was perhaps not typical, it had also not been a spontaneous 
outburst of rage on the part of unfortunate individuals seeking the 
attention of the people of Haifa. 

Within a short time the government appointed a commission to 
investigate the matter. However, the commission did not deal with 
the general aspects of the event — real or imagined ethnic discrimi- 
nation against Oriental immigrants — but instead limited itself to 
investigating the sequence of events in Haifa and the specific causes 
of the riot. At that time Israel had not yet been overrun by 
sociologists, and the public was therefore insufficiently aware of the 
need to examine social events in depth. Nevertheless in this case 
there were two good reasons for paying heed to the event: this was 
the first time that a group of immigrants defined itself on the basis of 
its origins and adopted the method of the violent demonstration to 
protest against discrimination, although the experiences it had 
undergone and which drove its members to adopt that method were 
not substantially different from those undergone by other groups of 
immigrants. All the immigrants, without exception, had experi- 
enced alienation and humiliation and encountered discrimination 
which impeded their promotion at work and sometimes even 
deprived them of a livelihood. However, no other group resorted to 
demonstrations of any kind, let alone violent ones. The second 
reason why the event merited attention lay in the manner in which 
the demonstration was justified; that was unique in its time. It 
displayed a profound hatred which even the most lenient and 
forgiving interpretation could not possibly reconcile with the 
standard, idyllic view of the return to Zion and of brethren dwelling 
together in peace. 

28 Initial Successes 

In this context it is worth quoting in full a letter to the editor of the 
daily newspaper Haaretz : 

I wish to comment on Mr Yehoshua Gilboa’s report in Haaretz 
of July 12, The Broken Windows on Hadar Hacarmel’. 
According to him, they ‘must serve as a warning'. 

Of what? What warning? What are you warning against? Is it 
against our discriminatory rulers? Or is it against those who are 
discriminated against and oppressed? Why is it that you 
happened to recall just now that Oriental Jews, who did not grow 
up under democratic rule, pose a threat to your democracy? 

In fact Oriental Jews are 65 per cent of the inhabitants of this 
country and their legal and historical right is no less and in fact 
even greater than yours, to live in it with equal rights, not only 
obligations. Despite your preposterous claims and contemptible 
accusations regarding their ignorance and democratic 
immaturity and your propaganda against their loyalty, Oriental 
Jews administered states and governments in both the distant 
and recent past in their many countries of origin. They were not 
slaves, as you described them and still picture them to yourse- 

Please tell all the young police officers to whom you spoke that 
they have no right to complain because they are not permitted to 
use the Nazi methods of repression which they learned from their 
experience of persecution in the recent past. Let the hand wither 
that is raised against the Oriental Jews to silence them or prevent 
them from demanding their elementary rights of equality and 
inclusion in the life of the state. 

It is the moral and formal duty of the Minister of the Police and 
the Commissioner, Mr Nachmias, themselves Oriental Jews, to 
bring disciplinary action against those loose-lipped officers who 
claimed that ‘Oriental Jews only respect force!’ Otherwise I shall 
deny their authority and leadership over their men. 

How you revile us! Until when will you revile us? Why do you 
continue to protect a police sergeant who shot a drunken man? Is 
it because he is western, a member of the master race? 

As for Almogi [the local labour boss] and his storm troopers 
operating from his Hadar, if a group of Oriental Jews is ever 
attacked, I and many tens of thousands like myself, will surely 
come, even if I have to sacrifice my life in that war, for it is a war 
of life and death for us and our children, to bring an end to their 

Initial Successes 29 

suffering from your discrimination, of which we have had 

The letter speaks for itself, and all comment is superfluous except to 
point out that no other controversial public event — and there was 
no scarcity of them in a country which, at that time also, tended to 
get highly excited about matters great and small — provoked a 
reaction so deeply fraught with anger and hatred. 

After several weeks of discussion, the explosive issues raised by 
the Wadi Salib riots were carefully wrapped up and placed on the 
shelf. The public, led by its politicians, preferred to believe they 
were dealing with a marginal group whose problems could be solved 
in the normal political manner, by improving local conditions and 
by giving jobs to some of the members of the community claiming to 
have suffered discrimination. The traces left by the event were faint, 
although those who sought the meaning of the events of Wadi Salib 
in their social context might have looked for it in Moshe Dayan’s 
remark, quoted above, concerning the transfer of Israel’s vital 
centres from Degania and Nahalal to the immigrant towns of 
Beersheba and Ashdod. However, Dayan’s words aroused only 
irritation: the public and its leaders did not wish to know. 

The first decade in the history of renewed Jewish statehood began 
with a bloody war. In the middle of that decade a second war was 
fought in which, for the first time, two basic tenets of the defence 
doctrine developed by the IDF and ratified by the government, that 
is, by the Prime Minister, David Ben-Gurion, were applied: the pre- 
emptive strike and carrying the war deep into enemy territory. Two 
wars in ten years ought to have made it clear that not only was the 
problem of Israel’s relations with its neighbours still unsolved, but 
also that it was still at an acute stage. But the subject attracted 
relatively little public attention in comparison with the intensive and 
even obsessive treatment it receives today. Even though the death 
and destruction wrought by the terrorists, the fedayeen, as they 
styled themselves, were extensively reported in the media, the 
broader questions arising from them were not included in the 
discussion of the national agenda. Ben-Aharon, for example, 
reviewed all the major topics that then concerned the labour 
movement and especially Mapai, the leading party, and the 
government it led, but he did not include the Israel-Arab conflict. 
Similarly Professor Eisenstadt's book, which presented a detailed 
review of the topics agitating the political community during the 

30 Initial Successes 

first fifteen years of the state, failed to mention that the state was 
still bounded by cease-fire lines, in other words, had no recognised 
international boundaries, and that its relations with its neighbours 
were a moot issue calling for some solution. Nor did the two 
authors, although knowledgable men in touch with the situation in 
the country, discuss the enmity of the Arab countries or the steps 
which ought to be taken to resolve the conflict. In retrospect it 
seems that the conflict with the neighbouring countries was 
perceived by the public and by the political community as a sort of 
fact of nature: like the sun rising in the east or the passage of the 
seasons. Means and methods of dealing with Israeli-Arab relations 
were simply absent from the national agenda. 

A fascinating consequence of this state of affairs was the fact that 
the war against Egypt in 1956, which Israel fought as part of an inter- 
national coalition, came and went without leaving any political 
trace . After an impressive military victory there came a superficially 
disappointing political conclusion — only superficially disap- 
pointing, in that as a result of the war the borders remained quiet for 
nearly ten years, a decade which later turned out to have been the 
golden age of the reconstituted Jewish commonwealth. The 
government was not called to account for its apparent failure; in this 
the difference between the reaction of the public and the political 
establishment to the outcome of the Sinai Campaign and what took 
place following Operation Peace for the Galilee, two wars which 
have a good deal in common, is highly instructive. During the first 
period people were barely conscious of the Arab-Israeli dispute as 
something attributable to men, whereas in the second period that 
awareness was a central subject of public discussion. 

Inasmuch as the enmity of the Arabs and its most virulent 
manifestation, war, was not viewed as a phenomenon belonging to 
the realm of politics, but rather as a kind of fact of nature, no 
systematic and sustained effort was made to discover its causes; nor 
were the possible ways of reducing it discussed. Nor, conversely, did 
any leader even consider the possibility of using military force to 
break the Arabs’ will to destroy Israel. This possibility served as a 
fundamental tenet in David Ben-Gurion’s thinking, evidence of his 
harsh realism . But he did not hold with the opinion adopted later by 
others that a decisive military victory was possible. 

In other words, during the first decade there was no analytical 
discussion of relations with Israel’s neighbours of the kind so well 
known today. The settling of the Arab-Israel conflict was not 

Initial Successes 31 

included in the national agenda, nor did it serve as a topic of debate 
between the opposing camps, nor had it yet been deemed worthy of 
academic investigation. The standard bearers of nationalist 
radicalism, too, ignored Israeli-Arab relations. The Herut 
Movement was preoccupied by relations with Germany, inflation, 
and the decisive influence of the Histadrut bureaucracy in society, 
and the slogan of ‘Both Banks of the Jordan’ was effectively 
ignored. This was a time of glory for Dr Yohanan Bader, the Herut 
spokesman on economic and social affairs. Menachem Begin and 
his comrades, the former Irgun Zevai Leumi commanders, did not 
yet set the political tone of their party. 

At that time Israel tended to regard the issue of relations with its 
Arab neighbours in the same way as the Dutch regard the sea: 
without reflection or discussion, the public agreed to invest its best 
efforts and resources in building dams against the tide which was 
liable to rise all of a sudden, without any cause accessible to human 
reason. The IDF, created at the height of the War of Independence, 
was equipped with the best weaponry that the new state could 
afford. For its part, the general staff invested an impressive intel- 
lectual effort in the development of a doctrine of warfare and of 
force structure based on a rational analysis of the conflict and the 
resources available to deal with it. As General Yisrael Tal wrote in 
the journal Maarakhot in 1975, the main points of that doctrine 

The IDF must defend the Jewish state in its given territory: it 
must carry out its task in awareness of the quantitative relations 
between the two sides (few against many); and it must be aware 
of the basic assymetry that informs its operations: if the Arabs 
defeat Israel, that will be the end of the state; but no IDF victory 
on the battlefield, even if decisive, will destroy even a single 
Arab state. 

One operational conclusion based on these fundamentals of 
military doctrine was that the IDF had to seek victory on the 
battlefield by relying on armour and the air force. The seizure of 
territory in the wake of a military victory was meant to provide the 
political leadership with a bargaining counter with which to buy 
respite from the Arab campaign aimed at the destruction of Israel, 
or, alternatively, to acquire a position of strategic superiority to be 
exploited until the cease-fire. 

32 Initial Successes 

It follows that the IDF was regarded by the political leadership as 
a tool — whether or not it was jointly used with other political tools 
— for maintaining security by military means. As for normalising 
relations with the Arabs, that was seen as beyond Israel’s grasp. 
They would be normalised as a result of decisions to be made, if they 
were made, elsewhere. Paradoxically, this political view, shared by 
many (although there were those who disagreed, and who, for that 
reason, were relegated to the sidelines), lacked a political character. 
To return to the analogy of the Dutch and the sea, war was seen as a 
natural element which could not be controlled, although a defence 
had to be found against its violence. Just as there is no need to 
discuss the need to build dikes, and their construction should 
naturally be left to professionals, so the Israeli Government 
entrusted the dangerous issue of friction with its neighbours to the 
professionals on the general staff. In effect, the public, its political 
representatives, and its leaders were denying the famous saying of 
von Clausewitz, that war is an extension of politics by other means. 
In any event, that is what is indicated by the absence of any 
substantive discussion of the relations between Israel and its 
neighbours, of the possibility of influencing them in any deliberate 
way, or of policies to be adopted for that purpose. The issue of 
relations with the Arabs simply did not figure in the public debate, 
and consequently, it was also absent from the national agenda. 


1 . Ahdut Haavoda split from Mapai in 1944 for several reasons, the chief of them 
being its opposition to the partition of Palestine advocated by Ben-Gurion as the only 
practicable means of achieving a Jewish State. Hazhomer Hatsair, a political party 
even further to the left than Ahdut Haavoda, had for many years advocated co- 
operation with the Arab inhabitants and the establishment of a bi-national state in 

2. Mapam (the Hebrew initials for United Workers’ Party) was the result of the 
combination of Ahdut Haavoda and Hashomer Hatzair before the establishment of 
the State of Israel. When the two parties split in 1954 Hashomer Hatzair retained the 
name of the United Workers' Party. 

3. Shmuel N. Eisenstadt, Israeli Society, Background , Development and 
Problems , (Magnes Publications, Jerusalem, 1967). 



A State of Unpreparedness 

The least planned war is what Moshe Dayan called the Six Day War 
in his autobiography, Milestones . ! It came upon the country's 
leadership and its citizens with breathtaking suddenness, from an 
unexpected direction, and with an unprecedented fury that left both 
participants and observers stunned. Events came to a head, a crisis 
blew up, took on existential proportions, and was dissipated with 
lightning speed: all this in less than a month from start to finish. The 
tempest shook the country, giving its leaders no respite to orient 
themselves, wrenching them out of one historical era and flinging 
them into the next. 

As we noted earlier, the national agenda with which the new state 
had set out on its way had been more or less accomplished by the 
end of the first decade. Since the early 1960s society was merely 
free-wheeling with one political uproar following on the heels of 
another. In 1966, about a year and a half before the events to be 
discussed now, the economy also collapsed: the public faced a 
recession that destroyed its belief in unlimited growth. Simul- 
taneous with these political and economic shocks, signs of shakiness 
appeared in the external stability of the situation, putting in 
jeopardy one of the prime achievements of the Sinai Campaign of 

People had high hopes of Levi Eshkol and the government he 
formed in 1965. The foundations were being laid for a new sort of 
bond with the United States; for the first time it had agreed to 
supply Israel with advanced weaponry. And the Prime Minister and 
his Foreign Minister Abba Eban, began to speak of a new era of 
understanding with the Soviet-oriented Arab states, with the help of 
the Soviet Union. Talk about the ‘Spirit of Tashkent' filled the air 
(referring to the successful mediation between India and Pakistan 
accomplished by the Soviet Premier, Aleksei Kosygin, in the Uzbek 
city of Tashkent). The desire to settle Israel's external problems, 
and the hope that what men of good will desire would come about, 
inspired Eshkol and the society which he both represented and 
symbolised at that time. 


34 Salvation in Blood and Fire 

However, things did not turn out as hoped. From 1964 on, a series 
of skirmishes took place between the IDF and the Syrian army in the 
north, focused on the Jordan River tributaries, the Banyas and the 
Hatsbani. Israel sought to divert its share of the water, as allocated 
under the internationally agreed Johnston plan 2 for its division, to 
the national water carrier. The Syrians also claimed the water. 
Heavy weapons were brought to the front. IDF tanks fired on 
Syrian bulldozers as they worked to divert the streams. The tension 
on the northern border increased. The Syrians used their artillery 
against Israeli settlements in the Galilee, and the IDF attacked from 
the air. At the peak of the confrontation six Syrian planes were shot 
down near Damascus. Following the logic of the situation, most 
Israelis believed that if there was to be a war, it would break out in 
the north. 

A surprise was in store for them: the crisis did not come on the 
northern border but in the south, and it was not provoked by a local 
matter like the use of the Jordan waters. The Egyptian President, 
Gamal Abdul Nasser, defined the conflict in unequivocal terms: on 
26 May 1967 he told a delegation of Arab trade unionists that, if 
Israel took aggressive action against Egypt or Syria, ‘the war against 
Israel will be total, and its goal will be the destruction of Israel’. In 
view of the steps he took, moving the Egyptian army into Sinai, 
closing the Straits of Tiran, and demanding the removal of the UN 
forces which occupied Sharm Al-Sheikh and patrolled the border of 
the Gaza Strip, there could be no doubt of his seriousness: within 
less than two weeks the State of Israel was confronted with a threat 
to its very existence. 

From the middle of May 1967 until the end of the month the 
Israeli Government seemed to be under a malign spell. Although 
the closure of the Straits of Tiran was a casus belli , Israel did not 
respond to the Egyptian provocation by opening the straits by force. 
Instead it became involved in hopeless diplomatic manoeuvres. The 
IDF pressed the government to call up the reserves, and when the 
authorisation was given, it converted itself in short order to a battle- 
ready military machine — in sharp contrast to its civilian masters, 
who vacillated between various explanations of what was happening 
along the borders. The IDF was given a free hand to prepare for 
war, using that freedom efficiently despite the temporary nervous 
collapse which took the chief of Staff, Yitshak Rabin, out of action 
between 23 and 25 May. In fact, the IDF acted in the way Israeli 
society had been functioning since the beginning of the decade, 

Salvation in Blood and Fire 35 

without a master plan, driven by the life instinct and the momentum 
of events, but with no direction. During at least the first stages of the 
crisis the military command had not yet set a war aim for the IDF in 
the event of the government ordering it to open fire. Things were 
even less clear within the government. 

The bewilderment of the political leadership revealed itself in its 
inability to determine the nature of the Egyptian challenge: was it 
an exercise in intimidation intended as a conditional warning (‘If 
you attack Syria, we shall attack you’), or had President Nasser 
made a firm decision to bring about Israel’s downfall either by 
psychological warfare or on the battlefield? The inability early in 
the crisis to understand that the country’s existence was being 
threatened — although within a few days it became clear to all that 
such was the nature of the threat — was a further consequence of the 
confusion and lack of direction which had characterised the political 
leadership in the first half of the 1960s. This confusion had led to 
self-delusion, to belief in the magical effect of moral ‘values’, and to 
the expectation that the Soviet Union and the Arabs would 
collaborate in resolving the Arab-Israeli conflict. In these 
circumstances the IDF’s effectiveness was limited to the area of its 
technical responsibility. It could call up the reserves, and it could 
press the political leaders to respond to the Egyptian challenge with 
massive force, in no small measure in response to pressures from the 
mobilised soldiers and based on the realisation that a reserve army 
could not remain on top alert for ever. However, confusion also 
gripped the army, but a different sort of confusion: the IDF had 
difficulty in identifying the strategic goals of the war. As is common 
in such cases, the command preferred to act cautiously: it planned to 
drive the Egyptian army back from the borders and seize something 
of military value — an area including the Gaza Strip and western 
Sinai as far as El Arish — so that the politicians would be able to 
bargain afterwards, giving back the territories, it was hoped, in 
return for reopening the Straits of Tiran. 

Throughout history it has been customary to name a period after 
a prominent ruler: between the Six Day War and the Yom Kippur 
War Moshe Dayan became the eponymous leader of Israel. Perhaps 
his meteoric rise during the time of paralysis in the second half of 
May was possible because he was outside the mainstream of Israeli 
politics, isolated and disappointed, but also free from the confusion 
that gripped the public and its leaders. On 22 May Dayan came out 
in rather general terms for a military confrontation with Egypt. 

36 Salvation in Blood and Fire 

Within 24 hours he managed to sharpen his insight into the situa- 
tion: he called for an attack against Egypt ‘hitting them hard and 
destroying hundreds of tanks and planes’. Given the logic of his 
advice, although he did not say so explicitly, Egypt, with its army 
mostly destroyed, would be forced, willy-nilly, to concede Israel’s 
right to use the straits. However, logic is not the same as a 
comprehensive view of the problem and the means for solving it; 
hence his principal reservation about the way the government was 
dealing with the crisis. As he wrote in the diary he began to keep at 
the time: 

I did not hear [during a meeting between the leaders of the 
government and the opposition in the presence of the Chief of 
Staff and his assistant] of any general plan, either political or 
military, for the war: nor did I hear of any link between the 
military campaign and the opening of the straits. 

The problem of the straits solved itself later, after the government 
had been pushed into war by the force of circumstances, after 
Dayan had been appointed Minister of Defence, and after the 
Egyptian army had been destroyed in eastern Sinai according to the 
revised plan of operations. The IDF victory brought about the 
reopening of the straits more or less as an afterthought. As for a 
combined military and political plan of action, in retrospect one can 
discern a combination of political actions which proved to have 
facilitated the opening of hostilities. Later on some people praised 
the wisdom of the delaying tactic with which they credited the 
government. However, the delay in opening fire was not deliberate 
but rather the result of hesitation about taking irrevocable action. 
The government failed to act because it did not understand the 
situation, and once it grasped the seriousness of the crisis, it was still 
incapable of decision. In fact, a tie vote on whether to go to war at 
one of the cabinet meetings was among the factors leading to 
Eshkol’s removal from the defence ministry. 

In retrospect, the events of the last two weeks of May look like 
the race between the tortoise and the hare: Nasser dissipated all 
his energy at the outset and had no strength left for the ultimate 
effort of attacking Israel, whereas the Israeli tortoise managed to 
muster its forces for a final sprint at the end of the race. But Israel 
went to war with no intentions beyond breaking out of the Arab 
stranglehold. When the IDF stood at the cease-fire lines on 10 June, 

Salvation in Blood and Fire 37 

the Straits of Tiran were open and the Arab armies defeated, but 
Israel had no idea what to do with its victory. The problem that had 
grown into an existential crisis of the sort just described was a 
political one, which neither the war nor the total military victory 
brought any nearer to a solution. Nor did the Israeli Government 
have any blueprint for its solution. 

At that time a good deal of attention was certainly given to the 
unchanging political realities: the public and the leadership 
continued to regard the stubborn hostility of the Arab states in the 
way one regards a natural phenomenon. At any rate, the resolutions 
of the Arab summit meeting at Khartoum — no peace, no negotia- 
tions, and no recognition — hardly surprised anyone. They also 
saddened very few people, if any. Public life, which had been devoid 
of values and directionless since the beginning of the decade, was 
now saturated with the victory, the way it had been obtained and the 
territorial fruits it had borne. The war, its achievements, and the 
challenges it posed, far exceeding anything previously faced by the 
Israeli public and its leaders, provided the ingredients for a new 
national agenda. 

The Exaltation of Victory 

Once the battle was over, the vacuum began to be filled with an 
almost obsessive concern with the war itself, its heroes, its comman- 
ders, and its weaponry. A feverish inquiry into the details of the 
battles began: the acts of heroism, the biographies of the comman- 
ders, and the technological marvels of the aircraft and tanks. The 
country was flooded with picture books about the war. Israelis also 
began to sing their own praises: the self-congratulatory speech of 
the Chief of Staff on the liberated campus of the Hebrew University 
on Mount Scopus is highly representative of the picture book era. 
The nation had been saved from a threat to its existence, and in this 
way it expressed its gratitude for the salvation brought to it by its 
army. It is noteworthy, however, that the political leadership, 
though by law and custom responsible for the army, received no 
share of the praise. The only member of the government who did 
receive praise was the stranger in its midst, Moshe Dayan, mainly 
because of his military background and his position as Minister of 
Defence directly in charge of the army. Later, attempts were made 
to minimise his part in the victory, but whether or not the critics 

38 Salvation in Blood and Fire 

were correct, they had no effect on his public position or his political 
power, which was based on his popularity with the general public. 

Why was the victory in the Six Day War not attributed to the 
political leadership as it had been in the two previous wars? In 1948 
the names of Yigael Yadin and Yigael Allon, the outstanding 
commanders of the IDF at the time, were also on everyone’s lips, as 
was that of Moshe Dayan, when, as Chief of Staff, the forces under 
his command achieved a military victory in 1956. But people then 
saw David Ben-Gurion as the leader, and they regarded the 
generals as technicians merely assisting the Prime Minister, to 
whom the victor’s crown rightfully belonged. 

The reason for the difference seems to be that the two previous 
wars were viewed as secondary incidents in the main story of the 
establishment of the state in 1948 and its continued construction and 
reinforcement afterwards. Conversely, in 1967 the public was 
preoccupied with an economic crisis and a crisis in the political 
leadership. One sign of the political crisis was the fact that, a few 
days before the first shot was fired, Levi Eshkol, the man at the 
pinnacle of the political pyramid, was forced to give up the defence 
portfolio, and to include Dayan, as well as Menachem Begin and 
Yosef Sapir of Gahal, in his government of national unity. People 
had lost faith not just in one man’s ability to act, but in the entire 
government. Its loss of direction was a clear consequence of the loss 
of the very capacity to frame a national agenda acceptable to the 
public which had incapacitated Mapai since early on in the second 
decade of the state’s existence. This incapacity eroded its self-confi- 
dence and impaired its ability to function independently, without 
recourse to outside assistance. The phenomenon which was first 
apparent during the Lavon Affair recurred: unlike its self-suffi- 
ciency in the Sharett crisis, to fight the war Mapai needed reinforce- 
ments from outside its ranks in order to overcome the weakness 
afflicting its leadership. And all this took place in full view of the 
public. People could not fail to sense that the claim to political 
leadership was hollow; for this reason it was not accorded the praise 
due to the victor. 

As the war and those who had fought it came to monopolise 
public attention, Israelis flooded into the recently liberated 
territories: Sinai, Sharm Al-Sheikh, the Golan, and especially 
Jerusalem and the landscape of the West Bank attracted masses of 
tourists. Whether he wished to feast his eyes on the historical sites of 
the land of his fathers, to view the Hula Valley spread out beneath 

Salvation in Blood and Fire 39 

him, to lose himself in the Sinai desert, or simply to buy a basket or 
some cheap glassware from Arabs in Samaria or Hebron or to see 
white flags flapping in recently captured villages, the average Israeli 
threw himself into the occupied territories as if seized by benign 
madness. The abstract concept of the homeland thus acquired 
concrete meaning: the land and the scriptural place names 
revitalised the Bible, and the Bible sanctioned the renewed 
possession of the land. Pictures of paratroopers with tears in their 
eyes as they stood on the Temple Mount, or of the sceptic, not to say 
latter-day pagan, Moshe Dayan, pushing a petition into a crack in 
the Western Wall as if he were an old-fashioned, orthodox Jew, left 
an ineradicable impression on the public mind. Thus the expansion 
of the country’s borders and the reunification of the ancient 
homeland provided legitimisation, half religious, half historical, for 
a new national agenda. 

In retrospect, the hesitancy of the political leadership to adapt 
itself to the new attitudes which were increasingly taking hold of the 
public is rather surprising. True, at one of the first post-war cabinet 
meetings the government set up a planning group to think about 
what should be done now that the war was over; it did not 
accomplish much, however. Even more striking from today’s point 
of view was the evident lack of interest in Judea and Samaria. Why 
was their future never seriously considered during those crucial 
weeks? Admittedly, the Egyptian challenge dominated the picture, 
even after Jordan joined the Arab coalition against Israel on 30 
May. The Israeli government went far beyond what can be termed 
lack of interest however: it appealed to King Hussein on the 
morning of 5 June, asking him not to open hostilities, and promising 
that Israel, for its part, would honour the status quo ; in other words, 
it gave up its claim to reunify the country in advance. One might 
argue that, even if Hussein had agreed, an Israeli victory over Egypt 
and Syria would have created a new situation on the eastern border 
as well. However, even if Israel had achieved decisive military 
superiority on the eastern border, it still could have done little more 
than press for minor changes here and there in Jerusalem and 
perhaps near Latrun — a salient astride the Tel Aviv-Jerusalem 
axis. In June of 1967 Israel and the international community still 
maintained relations of mutual respect with each other, and the 
international community would not have countenanced a flagrant 
violation of the territorial status quo between Israel and Jordan. 
Moshe Dayan himself, who was later to raise the banner of the Land 

40 Salvation in Blood and Fire 

of Israel, whether in its historical or its archaeological guise, 
commented at the time: ‘We did not go to war to conquer the West 

Concerning Jerusalem alone there was no doubt. Within a few 
days East Jerusalem was annexed. A law enacted in the Knesset on 
28 June established the municipal boundaries within which Israeli 
law applied, and, in addition, the symbolic action was taken of 
removing the physical barriers which had divided the city for twenty 
years. Against the background of these two decisive actions the 
government’s hesitancy and ambivalence with regard to the other 
parts of the land of Israel are even more conspicuous. On the night 
of 10 June, Dayan told a journalist that he was waiting for a 
telephone call from King Hussein. In other words, he expected an 
initiative for negotiations which would settle the future of the land 
of Israel. A few days afterwards the government proposed a 
settlement with the Arab countries, on the basis of the mandatory 
boundaries, that is, recognising the Jordan River as Israel’s eastern 
border. Three months later, however, in September, Dayan told a 
reporter of the London Sunday Times that he was prepared to 
return the West Bank to Hussein if the latter would agree to its 
demilitarisation. The statement was afterwards denied, though not 
by Dayan himself, and in such a way as to indicate that the journalist 
had in fact reported his remarks accurately. 

The Question of Borders 

At a conference organised by his party, Rafi, 3 in Tel Aviv in August 
1967 Dayan declared, ‘The primary issue before us is that of Israel’s 
boundaries’. This was a momentous remark. To the degree that 
Dayan could obligate Mapai, his former and future political home, 
he was setting out a new national agenda, at the centre of which lay 
the establishment of new borders for Israel. Since the end of the 
War of Independence the question of borders had not concerned 
the Israeli public, not even the Herut party, except for a passing 
moment after the Sinai campaign. People regarded the borders as 
they then were as permanent, and applied themselves to improving 
their economic position as individuals and to the advancement of 
the state within the existing frontiers. Now a far-reaching change, 
brought out by pressure from below, occurred in the very centre of 
Israeli politics. In a formal sense, the change was expressed in the 

Salvation in Blood and Fire 41 

aforementioned proposals regarding peace terms, which were 
adopted without opposition. In practice it took the form of a slow 
but systematic expansion of Jewish settlements in the occupied 
territories. Yigael Allon, one of the prominent ministers in Eshkol’s 
government, even went so far as to present a plan accompanied by a 
detailed map, according to which the West Bank was to be divided 
between Israel and Jordan, thus indicating that Dayan was not the 
only one to hold this view. When the question of borders was placed 
at the top of Israel’s priorities, the only prominent statesman who 
sensed where a national agenda centred around borders would lead 

— as he had perceived the significance of events in the past — was 
David Ben-Gurion. In return for peace, he proposed withdrawal to 
the 4 June 1967 borders, with the exception of Jerusalem. Apart 
from correcting the ‘eternally lamentable failure’, — his phrase for 
the failure to break through the walls of the Old City of Jerusalem in 
1948 — Ben-Gurion wanted nothing. He knew that the govern- 
ment’s proposals were bound to lead to a bi-national state in which 
Jewish independence would be lost and the basic values which he 
had advocated since his arrival in Palestine, such as Jewish labour 
including hard physical labour, would be eroded. 

Between June 1967 and the end of 1968 the elements of a new 
national agenda took shape: the aspiration to establish permanent 
expanded borders to include portions of Palestine occupied by 
Arabs within the map of the country, although not in a way 
formalised by international law; and further, the emphasis upon 
military power as the mainstay of national existence. The impor- 
tance of the latter had never been in doubt, but against the 
background of the war, and in view of Israel’s comparative position 
before and after it, the IDF rose several degrees in the hierarchy of 
national values. Moreover, the victory solved the problems of the 
economy: within less than two years after the outbreak of the war — 
it will be recalled that it broke out in the depths of a severe recession 

— the country responded with furious economic activity. Real 
income rose. There was full employment, and it even became 
necessary to draw on manpower from the conquered territories to 
supply the economy’s growing need for workers. Along with these 
developments certain patterns of co-existence with the Arabs from 
the territories emerged, at the centre of which stood a firm but 
relaxed, even benevolent, military government. Within two years 
the characteristic traits of Dayan’s policies were visible in Judea, 
Samaria, and the Gaza Strip, including the free flow of goods and 

42 Salvation in Blood and Fire 

people across the Jordan River bridges, free movement within the 
whole area under Israeli control, and employment for anyone who 
wanted to work. (This channelled some of the resources then 
flowing into Israel towards the Arab population; it is difficult to 
imagine a better method of quashing the desire to revolt than by 
drowning it in a torrent of money.) Dayan was not alone in 
calculating that this would be the permanent pattern for the internal 
settlement between Jews and the Arab inhabitants of Palestine, a 
pattern which could last for ever. 

The Dayan Era 

How did it come about at this juncture in the nation’s history that 
the government was identified not with the man at its head but with 
the Minister of Defence, who represented, if one may say that 
Dayan represented any institution, a minority party which was in 
the process of eliminating itself? Moreover, why should the first 
formulation of the new national agenda be attributed to him, as well 
as the creation of a pattern of life for Jews and Arabs in a state which 
was in fact jointly theirs? The answer is that at that time and until the 
Yom Kippur War, Dayan was what we now call the ‘King of Israel’ 
in the eyes of the Israeli public, of diaspora Jewry, and of the non- 
Jewish world. In his years of glory , he spoke for the liberal left — by 
virtue of his advocacy of a humane and enlightened attitude towards 
the Arabs — and for the nationalist right, who correctly understood 
that he was in fact implementing their dream of the entire Land of 
Israel. He was borne aloft on the waves of affection and respect 
which had been Ben-Gurion’s during the first decade of the state’s 
existence. At that time he seemed omnipotent, and his miraculous 
rescue from a landslide that had buried him merely strengthened the 
impression that the hand of Providence was stretched out over him. 
Obviously some people gnashed their teeth in anger at seeing 
Dayan raised to such heights, but that gnashing of teeth was ineffec- 
tual: the man seemed to be beyond the reach of his political rivals. 

Anyone who kept close track of Dayan’s words and actions 
during his heyday, before he was caught out making obscure state- 
ments indicating an inability to cope with the predictable contradic- 
tions in which his policies became entangled, could already distin- 
guish the basic features of his thinking. The first was sitting on the 
fence. When exposed, he would cover himself by ambiguous state- 

Salvation in Blood and Fire 43 

ments, which were the opposite of what one expected from a 
straight-talking Sabra (native-born Jewish Israeli). 

Here is an example from the speech to his party conference 
quoted above: ‘The territories we have taken, including the Suez 
Canal and the Golan Heights, are precious to us. But they differ 
from the cradle of our history, Hebron, Shilo, and Anatot’. After 
that introduction one would expect a conclusion in keeping with the 
government’s decision that the mandatory borders should become 
the boundaries of the State of Israel, and that Dayan was recom- 
meding the annexation of the West Bank, no matter what formula 
he chose. However, he added, ‘It is not a question of borders and 
Lebensraum. It is much deeper and more binding than our 
connection with the other territory we have conquered’. Then, after 
mentioning the bond between the Bible and the Land of the Bible, 
what was his practical conclusion? ‘The right to pray at the Tomb of 
the Patriarchs in Hebron, the right to live together [with the Arabs] 
in the cradle of our culture’. He concluded with a sentence that left 
the listener in limbo: ‘These are not political programmes but 
something much stronger than political programmes — they are the 
dreams of a nation which have come true’. But the same pressing 
questions remained: what was to be done with the West Bank from 
a political point of view? Must it be placed under Israeli sovereignty, 
or was it merely necessary to permit Jews to pray at the Tomb of the 
Patriarchs? Must they simply have the right to live in the cradle of 
their culture, regardless of whether as its owners or as guests, even 
permanent guests? In an experience like a dream, there is in fact no 
need to provide a clear-cut answer, but Dayan was a statesman, and 
an outstanding one, when he made that speech. He posed obscure 
questions to which he supplied obscure and ambiguous answers with 
as many meanings as there were interpreters. 

As we have said, Dayan placed the issue of the borders at the top 
of the national agenda. But in a lecture which he gave in the summer 
of 1969 he showed his true self in a powerful personal confession. 4 
Those who knew him knew that Moshe Dayan was speaking here as 
he really was, without the ceremonial mask of the general and the 
politician. In that lecture, entitled ‘Fear Not, My Servant Jacob’, an 
existentialist’s creed was revealed, negating the very question of 
purpose. Purpose, even in the life and prosperity of a nation, is not 
worthy of our attention, although it is natural to seek it. The only 
subject which need concern us, the one which uniquely concerned 
the lecturer, was the existential struggle ‘for which we have been 

44 Salvation in Blood and Fire 

destined throughout all generations’. Thence the unique and single 
imperative: Let us continue to struggle. So that its spirit would not 
flag nor its hands weaken, the following words, both mild and 
severe at the same time, were spoken to the nation: ‘Fear not, my 
servant Jacob’. Within the arid and chill expanse of that lecture, 
there was no place for borders. There were no historic rights, not to 
mention security in any concrete sense — not exactly what one 
would expect of someone who was not just any politician, but a 
popular leader. The lecture presented an abstract struggle for 
existence, without any visible cause or defined purpose, in effect, 
struggle for its own sake. That personal and austere message, 
though it was full of glory and courage, could not, in the final 
analysis, fulfil the public’s need for political answers. Dayan’s alter- 
ation of the structure and values of Israeli policy was therefore made 
specific later on by Menachem Begin and the disciples of the late 
Rabbi Ysvi Yehuda Kook (the theological authority most 
influential among the religious settlers in the West Bank), who 
knew and stated clearly what was black and what was white. 

The War of Attrition 

Although during its early years Israel’s sovereignty was of a very 
special sort in that the state lacked fixed borders, its first wars, both 
in 1948 and 1956, were normal wars: they began on a certain date 
and ended on another. The armies that participated in them ceased 
firing at each other. True, after 1951 there were a large number of 
infiltrators from the south, the east, and the north who stole, killed, 
and committed acts of sabotage and espionage. However, these acts 
were committed by irregular forces which, while they enjoyed the 
support of countries which claimed they were still in a state of war 
with Israel, did not aim at military victory or conquest. The infil- 
trators came and went, making every effort not to encounter the 
Israeli security forces. There were exceptions. In the early 1950s 
skirmishes took place between the IDF and the Jordanian army, 
and in 1964 there were exchanges of fire with the Syrian army, but 
these were isolated incidents which had little effect on daily life. In 
this sense they were like the infiltration mentioned above: for the 
vast majority of the Israeli public they were basically reading matter 
in the newspapers. 

This was no longer the case after the Six Day War. After a short 

Salvation in Blood and Fire 45 

period of respite, a continuous series of hostilities took place on a 
considerable scale. Along the Suez Canal the Egyptians opened fire 
which only subsided to begin again the next day. In mid-1968 hardly 
a week passed, and, for a while, hardly a day, when the Israeli 
newspapers did not publish the photographs of young men — their 
faces clearly showed they were conscripts — killed by Egyptian fire . 
Between 1968 and 1970 the Israeli public became acquainted with a 
new kind of war, a war of attrition , in which armies never stop firing 
on each other. Israel did not turn the other cheek. The IDF attacked 
Egypt on land, including daring amphibious raids, and from the air. 
In 1969-70 the bombing became so intense that the Egyptians were 
forced to call for Soviet assistance to defend the skies over their 
capital and the airspace over the Canal. 

The War of Attrition came to an end in August 1970 through the 
intervention of the great powers, who feared the outbreak of a full- 
scale war. However, the years between 1968 and 1970 left the 
ineradicable impression of war as a constant presence which made 
its mark on public life by the grievous loss of life and the economic 
effort needed to maintain an armistice line which was not quiet for a 

The Internal Debate 

Consequently, the war became a subject of public debate of the first 
order, about which opinions differed widely. Some recalled the 
exaltation of June 1967, the lightning victory and the expansion of 
political horizons in its aftermath. They saw the achievements of the 
war as prized possessions, and their retention worthy of any 
sacrifice over any length of time. Others argued that, since even the 
crushing victory of the Six Day War had not brought peace any 
nearer, a compromise must be sought, including the return of 
conquered territory, in order to put an end to the slaughter, the 
suffering, and the material destruction. Henceforth the division 
between doves and hawks came to dominate Israeli politics, as 
opposed to the traditional division between capitalists and proleta- 
rians or secular and religious Jews. The reason was clear: in that war 
was becoming a central national experience, attitudes towards it 
naturally became the primary identifying marks of the citizen’s or 
politician’s place in the political spectrum. 

Inevitably the question which had concerned many people before 

46 Salvation in Blood and Fire 

the establishment of the state constantly recurred: is co-existence 
between Jews and Arabs possible? The answer to that question was 
sought particularly energetically by those who held that the 
conquests of the Six Day War were not bargaining counters, i.e. not 
possessions in return for which Israel would gain other advantages if 
and when the Arab countries rescinded the resolutions of the 
Khartoum Conference and entered into peace negotiations. Moshe 
Dayan and growing numbers of Israelis therefore concentrated 
their attention on the issue of co-existence. From their point of view 
the Land of Israel — and later the Golan Heights and portions of the 
Sinai Peninsula — were not for sale. Since those regions of the Land 
of Israel, — Judea and Samaria and the Gaza Strip — were densely 
populated by Arabs, the issue of the legal status of that population 
as individuals and as a group imposed itself upon public opinion , on 
the political community, and on the government. Thus another 
component was added to the national agenda, although those who 
advocated the return of all or most of the territories would certainly 
have wished to prevent its inclusion. Perhaps the effort to prevent 
the erasure of the Green Line (the pre-5 June armistice line) would 
have received wider public support if it had not become increasingly 
clear that, even in the very best possible case, one was speaking in 
terms of an extremely prolonged temporary state — for years went 
by and not a single Arab state was found willing to fly in the face of 
the three ‘Noes’ of Khartoum. 

Logically it was the doves who had to revise one of the basic 
assumptions common in Israel before the Six Day War, namely the 
view that Arab hostility was a fact of nature. The desire to 
compromise, which arose, among other things, from the doves’ 
recognition of the difficulties of co-existence with an Arab 
population of 1.2-1. 3 million, demanded that partners in dialogue 
be found. But the very idea of dialogue had to be based on the 
assumption that not only was there someone to whom one could 
speak or that such a partner could be found in the foreseeable 
future, but that this interlocutor would also be guided by reason and 
be prepared to be influenced by political arguments. That is, the 
doves were forced by their own logic to abandon the view that Arab 
hostility was a given which could not be altered by Israeli policy, 
with or without the good offices of intermediaries. 

The political debate within Israel led to two complementary 
results and overturned certain opinions which had enjoyed general 
acceptance prior to the Six Day War. The hawks accepted the Pales- 

Salvation in Blood and Fire 47 

tinian Arabs as citizens of the country, though not exactly in the 
legal sense, including the Druze of the Golan Heights and the 
Beduin of the Sinai Peninsula; in contrast, the doves included the 
Arab states in the political community with which contact and 
dialogue must be initiated in order to resolve political disputes. This 
process led to a convergence of opinions that were seemingly polar 
opposites and contributed to the de-demonisation of the Arabs. 
From an inexplicable and uncontrollable phenomenon of nature, 
they became the potential object of widely diverse political 
approaches ranging from war, through the establishment of 
majority-minority relations, to making peace. 

One cannot exaggerate the depth and extent of the change which 
took place in Israel in the aftermath of the Six Day War. The 
national agenda, which was dynamic up to 1960 but increasingly 
frozen until the war, had a single issue at its core, the construction 
and strengthening of the Jewish community from within. The wars 
which took place in that period did not alter that emphasis. Perhaps 
this would have remained the case after 1967, had Israel been 
guided by a vigorous national agenda. But the war fell upon the 
nation and its leaders while they were suspended in limbo. Thus the 
new agenda shaped by the war and its aftermath was established 
with little difficulty. 

As we have said, the war, its achievements and the challenges it 
presented became the principal items in the new national agenda. 
Another component, a creation of the times, was also included: the 
sense of power projected beyond the borders of the state. In the 
early 1950s Ben-Gurion had considered asking for Israel’s inclusion 
in NATO, a notion based less on what Israel might contribute to the 
alliance beyond making its territory available to the hoped-for 
partnership, than on the additional security which the alliance 
would provide. From 1967 on this was no longer the case. A glance 
at the map was sufficient to show that Israel had become a regional 
power extending from the Suez Canal to Sharm Al-Sheikh in the 
south, sitting only a few dozen kilometers from Damascus, and 
controlling the Saudi oil pipeline (the Tapline, debouching in 
Tripoli in Lebanon) in the north. Israel had just vanquished in less 
than a week, a coalition of the three strongest Arab armies and, 
moreover, its air force possessed strategic capabilities. To illustrate 
the feeling that Israel had become a power, one should recall that 
Yigael Allon, who, in terms of the period, tended to the doveish 
side, seriously considered establishing a Druze state under Israel’s 

48 Salvation in Blood and Fire 

protection. At the time Israel provided the main support for the 
Kurdish rebellion in Iraq. In 1970 it acted in co-ordination with the 
United States to deter Syria from intervening in the war waged by 
King Hussein of Jordan against the Palestine Liberation Organisa- 
tion, which sought to seize power east of the Jordan. The changes 
wrought by the war, following which the Arabs in the areas under 
direct Israeli control as well as those in the Arab states became an 
object of policy, Israel’s strong position in the region, and the 
accompanying feeling of being a power — all this transformed Israel 
beyond all recognition and persuaded the public to adopt an agenda 
which had not existed during the 1950s, even in embryo. 

In early 1965 the Herut Movement and the Liberal Party estab- 
lished a political bloc, in reaction to the establishment of the ‘New 
Alignment’ of Mapai and Ahdut Haavoda. Yosef Sapir and his 
comrades within the General Zionist Party viewed the step taken by 
Levi Eshkol and Yisrael Galili as finally blocking the way for any 
centre-left coalition. The response came in two stages: the General 
Zionists dissolved their partnership with the Progressive Party, with 
whom they had gone to the polls in the elections to the fifth Knesset 
in 1961 as the Liberal Party; they then established a new electoral 
bloc in partnership with Herut — Gahal (a Hebrew acronym). 

Those who would believe that strict laws govern the events of 
history may reflect on what might have happened if the President of 
Egypt had not committed the error — some say act of madness — of 
mounting a challenge to Israel’s existence in May 1967. At the time 
the problems of the economic recession preoccupied the Israeli 
public to the exclusion of all other concerns. There were no signs 
that the end of the crisis was in sight and, in any event, to put an end 
to it would have taken considerable time and entailed many difficul- 
ties. This hypothetical process would certainly have made the crisis 
within Mapai more acute, and the leading party in the coalition 
would have had to face the voters in 1969 in a weakened condition, 
saddled, as it were, with the burden of economic recession and 
unemployment unprecedented since the establishment of the state. 
Opposing it would have been the Herut-Liberal bloc with a very 
different economic approach, offering its own national agenda with 
a strong nationalist tinge — although not an operational one, if one 
can judge from the silencing of Herut’s claim to the East bank of the 
Jordan and even to the West Bank — but primarily bearing a clear 
economic and social message. There is reason to believe that if that 
had been the course of events, with an electoral contest against the 

Salvation in Blood and Fire 49 

background of the economic crisis, the new bloc would have taken 
most of its character from the General Zionist element. And it is not 
wildly fantastic to envisage Yosef Sapir, who was then in his prime, 
as a major leader and ultimately the head of Gahal as it led an alter- 
native coalition government. 

However, that was not the course taken by events. President 
Nasser prolonged Mapai’s life, although Mapai (later the Labour 
Party) did little to justify his generosity apart from re-admitting 
Moshe Dayan into its ranks and partially and hesitantly reconciling 
itself to the new national agenda mainly created by him. This 
brought about a change in the balance of power within Gahal: its 
nationalism sprang to renewed life as the memory of the recession 
faded. Its historical platform, laying claim to the entire Land of 
Israel, was now about to materialise thanks to the IDF’s conquests, 
and to gain ascendance until ultimately Herut received its final 
legitimisation from the man best suited to grant it — Moshe Dayan, 
who declared that Menachem Begin was closer to him than Meir 
Yaari (the leading ideologist of the leftist Hashomer Hatsair 
movement and by then a member of the Labour Alignment). 
Dayan’s remarks had been made in a limited political context, but in 
two senses they were the honest truth considering the man who 
made them: Mapam and the historical leftism of the kibbutz party 
had never meant much to Dayan, the statist moshavnik\ and 
although he abhorred Begin’s nationalist pathos, the two saw eye to 
eye on the inclusion of all of the Land of Israel under Israeli 
sovereignty. The tactical differences between the two as to the ways 
and means of achieving this could not obscure the identity between 
them on the main point of the new national agenda. 

As noted, in practical terms Nasser granted a reprieve to Mapai- 
Labour rule, which Mapai used to bolster its much weakened 
position by adapting itself to the new attitudes now gaining currency 
in the public mind and the new national agenda. Changes in 
leadership also promoted the process of adaptation: Levi Eshkol 
died in early 1969, and his place as Prime Minister was taken by 
Golda Meir. Unlike her predecessor, she was not easily tempted to 
believe that any change had taken place in Arab public opinion or in 
the attitudes of the Arab leadership, which would open the way for 
a political settlement with the Arab countries. She re-established 
the national unity government of June 1967, thus reaffirming, of her 
own free will, the programme that had been agreed upon under 
duress in conditions of national emergency. She also ratified the 

50 Salvation in Blood and Fire 

aforementioned process of adaptation which one cannot imagine 
would have taken place if the left, led by the Labour Party, had had 
a valid national agenda of its own. But, since such an agenda was 
lacking, and Gahal saw no reason to abandon a satisfactory partner- 
ship, it stayed in the government, and so, with no real opposition to 
the national agenda then in force, the 1969 elections proceeded in a 
low-key manner. 

A few examples from this period illustrate the atmosphere of 
ennui and the absence of political contest between the major 
parties. About a month and a half before the elections, on 28 
September 1969, Eliezer Livne, who in his latter years had become 
one of the most prominent intellectual proponents of the movement 
for the Land of Israel, wrote in Haaretz : The elections for the 
seventh Knesset inaugurate no new stage: they are the final step in 
the degeneration of an old situation’. He added, ‘It is sufficient to 
say that the Labour Party has betrayed its essential goals ... of 
proposing a national policy and selecting leaders’. Two weeks later, 
on 17 October, Yoel Marcus wrote in the same newspaper: ‘For the 
first time the election campaign lacks any challenge or central issue’. 
And Yeremiyahu Yovel, one of the rising publicists among the 
doves, entitled his article on that very subject in Haaretz of 21 
October ‘Elections without Controversy’. These quotations might 
appear somewhat exaggerated. For professional reasons journalists 
like sharp definitions and ideological disputes, both of which are 
hateful to politicians. But a retrospective analysis confirms the then 
prevailing view: the election campaign of 1969 was shadow-boxing. 
It could not be anything else, for it was conducted on the basis 
proposed by Dayan, which Gahal found no difficulty in supporting, 
and with which the Labour Party agreed for lack of any alternative 
of its own. Dayan expressed the substance of the new national 
agenda in an election speech on 27 October: ‘Our main purpose is to 
make the new territories into Israeli territories’. 

Had the elections been held at the end of 1970 and not a year 
earlier, they would not have lacked a central issue; and this only 
goes to show how greatly political controversies and decisions are 
influenced by external events which are not necessarily predictable. 
In August 1970 a cease-fire along the Suez Canal came into effect 
(and afterwards along the cease-fire line with Syria also). Under the 
terms of the cease-fire, Israel agreed to declare its acceptance of 
Security Council Resolution 242, according to which it had to 
withdraw from conquered territories. Since 1967 that resolution had 

Salvation in Blood and Fire 5 1 

been a subject of endless controversy because the English and 
French texts can be construed differently; the English version can 
be interpreted to mean that Israel has to withdraw from some, but 
not all, of the conquered territories, whereas the French version 
seems to order Israel to withdraw from all of them. In Menachem 
Begin’s view the entire Resolution was bad — he changed this view 
only upon being named Prime Minister in 1977; he therefore led 
Gahal out of the coalition. It stands to reason that Begin would have 
made the Resolution and its ratification by the government into a 
central campaign issue in an election contested by candidates 
divided between those prepared to withdraw in return for peace and 
recognition and those insisting on the annexation of the West Bank 
as a minimum, whatever the price. 

A second issue, poverty and ethnicity, also arrived on the scene 
too late for the 1969 elections. We have already mentioned that 
before the 1959 elections the subject arose and then faded away. 
Ten years later it did not even arise. But since May 1971 it has not 
left the political agenda. Nevertheless, the problem of poverty and 
ethnicity never became a central or decisive issue, nor did it 
determine the identity or character of the government, mainly 
because all the parties declared themselves willing to solve it and, in 
effect, to make it disappear. 

Given the broad agreement about the existence of the problem 
and the need to solve it, it might seem surprising that such a long 
time was needed before it received conscious attention: more than 
twenty years passed in the life of a sovereign society in which the 
voter was able to influence the government directly, before the issue 
was identified and publicly discussed. A probable reason for the 
tardiness in identifying the issue is that the political community 
lacked intellectual categories for grasping both aspects of the 
subject. During Israel’s first two decades both the right and the left 
arrayed themselves on either side of the line separating employers 
and self-employed, on the one hand, and wage-earners, on the 
other. This Marxian scheme, both in its radical and its social-democ- 
ratic versions, divided the world between those who live only by 
their own labours and everyone else, and the distinction was 
accepted by the right as well , although without accepting the conclu- 
sions drawn by the left. Poverty has only been discovered in post- 
Marxian society, that is, the consumer society, in which the poor are 
defined as those who do not receive their due share of the general 
abundance of goods and services. 

52 Salvation in Blood and Fire 

Since Mapai had shed its socialist beliefs years before, it had little 
difficulty in making the ideological transition from the worker- 
capitalist to the poor-rich dichotomy. Yitzhak Ben-Aharon, for 
example, as the Secretary of the Histadrut, an organisation whose 
entire existence was justified by the division between workers and 
employers, gave a great deal of attention to poverty and its 
problems. The other parties followed Mapai’s lead. However, they 
all needed a push to start thinking in terms of poverty and affluence, 
and, even before that, the objective conditions for such a way of 
thinking needed to come into existence. Until the late 1960s it is 
doubtful whether one could regard Israel as a relatively affluent 
society. And this is the necessary background for the distinction 
between the affluent and those who live in an affluent society 
without sharing its benefits — in other words, their housing is 
substandard and their incomes are low and irregular. 

As for the ethnic component, its very mention must be seen as a 
violation of the Zionist creed accepted throughout the political 
community and according to which there is not and cannot be any 
distinction between one Jew and another, not to mention discrimi- 
nation brought about deliberately or by neglect. However by 1971 
the problem, or rather consciousness of the problem, surfaced and 
imposed itself on public opinion. It seems quite likely that originally 
the issue was imported from the United States, where from the mid- 
1960s onward a growing campaign had been waged for equal civil 
rights for blacks who in a short time also came to be known as the 
poor. In other words, in the United States, two social movements 
were fused. The first fought for civil rights, the second for the 
improvement of the economic lot of the blacks and Martin Luther 
King, the black Protestant minister who headed the movement, 
sought to combine the struggle against racial discrimination with the 
struggle to improve the economic situation of the black population. 
Information about the black struggle for civil rights reached Israel 
with the thousands of students who returned to the country after 
completing their studies in the United States, and it made an 
increasingly strong impression there. In the late 1960s the process of 
Americanisation was in full swing in Israel: anyone seeking legitimi- 
sation for a cultural or political innovation felt obliged to find it in an 
American model. This was the background for the apparently 
surprising fact that a group of young people of Moroccan descent in 
the Musrara neighbourhood of Jerusalem called themselves ‘Panth- 
ers’, after the Black Panthers in the United States. 

Salvation in Blood and Fire 53 

In early January 1971 the leftwing newspaper Al Hamishmar 
published an article about the group under the headline ‘We will be 
Israel’s Black Panthers’. The article said that the Panthers would 
fight the government, the Ashkenazis, and the establishment. One 
of the activists was quoted, apparently in connection with the trial of 
the Jews in Leningrad accused of hijacking an airliner: ‘When they 
hanged black Jews in Baghdad, the Ashkenazis kept quiet. Now, 
when they are planning to hang white Jews in Russia, they go on 
hunger strikes and everybody is out demonstrating’. In itself this 
statement constituted a heretical denial of the main tenet of 
Zionism — Jewish solidarity under all conditions. Further talks with 
the activists showed that, in addition to accusing the government 
and the establishment of ethnic discrimination, they exhibited great 
bitterness over economic discrimination, particularly in housing. 
The copy of the American model was thus complete: claims of racial 
discrimination — ethnic discrimination in the Israeli version — 
combined with economic discrimination. No wonder the Panthers’ 
demonstrations were quickly joined by activists from Siah and 
Matzpen, two ultra leftish groups which, in addition to being 100 per 
cent Ashkenazi, combined anti-Zionism with a sensitive social 
conscience. Thus the New Left, the radicals, in Israel as in the 
United States, discovered that the combination of poverty and 
ethnicity could be used as a stick with which to beat the affluent 

The New Left was not alone in being interested in the subject. In 
1971, a vintage year for social awareness in Israel, the affluent 
society, though only relatively so, took up the question of poverty, 
defined as a deficiency in consumption, and its identifying mark, 
ethnic discrimination. One of many examples indicating this 
concern was a series of articles by Eliahu Salpeter in Haaretz , 
perhaps the first exhaustive treatment of the subject of social 
divisions to appear in the Israeli press. In these articles Salpeter 
concentrated on the visible symptoms of the problem: the relative 
disadvantages of the Oriental Jews in education and housing, which 
he presented as comprehensive manifestations of the income diffe- 
rential between Jews of European and American origin and those 
born in Israel as against immigrants from Asia and Africa. It is 
noteworthy that he did not mention the feelings of deracination and 
disorientation which came in the aftermath of the transition from a 
traditional community to a modern society, or the condescending 
attitudes of the veteran residents to the new immigrants, both of 

54 Salvation in Blood and Fire 

which combined to arouse and foster hatred against the Ashkenazis. 
This was a strange omission, for if there was hatred it should have 
been foremost among the problems demanding discussion. In any 
event, the Israeli establishment had long since and willingly 
accorded a high priority to closing the gaps in housing (and in 
income generally) and in education. But there was no conscious 
treatment of the psychological effects, namely the anger and hatred 
arising out of differences in levels of consumption or the coldness of 
the veterans towards the new arrivals. Perhaps this was because in a 
materialist society problems can only be defined quantitatively. 
However that may be, from 1971 onwards the issue of poverty and 
ethnicity was included in the national agenda — not as a primary 
issue like that of the borders, but as a secondary one, whose impor- 
tance in internal politics could no longer be ignored. 

In the wake of the victory in the Six Day War and the effective 
expansion of Israel’s borders, a new national agenda came into 
being, based on political values which had not been accepted until 
then except by marginal public figures. Nor was the voice of those 
loyal to ‘Little Israel’, within the borders of 4 June 1967, heard; they 
were pushed aside by circumstances and placed on the defensive. 
The resolutions of the Khartoum conference and the massive 
rearmament undertaken by the Arab states shortly after the battle 
died down blocked the way to negotiations. At the same time, the 
ease with which the barriers between the Arab inhabitants of the 
West Bank and the Israeli occupation forces fell, as well as the flood 
of workers from the newly occupied territories seeking employment 
in Israel, blinded many people, including those apprehensive about 
territorial over-expansion, given that the population of these 
territories were not granted equal political and economic status. 

Nevertheless, the achievements of the war, which vindicated the 
hawks and swelled their ranks, did not completely empty the camp 
of the doves. For historical reasons they were concentrated in the 
Labour Party, sharing the sense that Israel was getting too big for its 
own good, disturbed by the appearance of Arabs from the 
territories in a society that had been overwhelmingly Jewish until 
the war, and fearing that Israel had entered an arena where only 
great powers can contend without coming to grief. In addition to the 
initial unhappiness and apprehension, there were practical reasons 
later on for opposition, at first passive and then active, to the policy 
of expanded borders and its perceived consequence — continued 
war. The principal reasons were the rising material cost of 

Salvation in Blood and Fire 55 

maintaining an effective state of war and, even more, the casualties, 
those killed and maimed in the exchanges of fire along the Suez 
Canal, the pursuits in the Jordan Valley, and the skirmishes in the 

Why did the doves congregate in the Labour Party? It should be 
borne in mind that that party was identified with the State of Israel 
of 1949, that since the 1930s its members had never been deluded by 
notions of a bi-national state (either socialist or imperial) and that a 
good number of its leaders, as typified by the Finance Minister, 
Pinhas Sapir, were responsible for the proper functioning of the 
economy and thus fearful about the economic cost of a Greater 
Israel. Moreover, many Labour members opposed the policy 
because they despised its prime mover, Moshe Dayan. He belonged 
to their party, had been born and brought up in it, but he was consi- 
dered, and perhaps rightly, to be one who had left it for greener 

These establishment doves were in a double bind. They were 
members of a party which, willingly or otherwise, bore the burden 
of government and did not wish to give up its perquisites. What is 
more, the Arabs took no visible notice of them. On the contrary, 
from 1968 onwards, the Arab states, led by Egypt, having rapidly 
recovered from the shock of their military defeat, initiated positonal 
warfare on the Egyptian front along the Suez Canal and a guerrilla 
war along the Jordan and inside Israel. Both forms of war were 
intended to compel Israel to withdraw, rather than to achieve 
withdrawal through negotiations. As noted earlier, the logic of the 
doves’ position had to be based on the assumption that there was a 
possibility of coming to terms with the neighbouring states; but until 
President Nasser’s death in the autumn of 1970, there was nothing 
to support that assumption. In 1971 President Sadat did put out 
feelers aimed at breaking the deadlock: he proposed a partial settle- 
ment, with Israeli withdrawal to the interior of the Sinai Peninsula 
in return for a kind of cease-fire. But in the meantime two of the 
practical arguments used by the doves to justify their desire for an 
agreement had disappeared. From August 1970 the fighting along 
the Suez Canal had died down, and with it, the loss of life. And the 
PLO which had been responsible for the guerrilla warfare along the 
Jordan and within Israel, had been defeated in fierce battles with 
the Jordanian army and was engaged in the process of reorgani- 
sation in Lebanon. At the same time, US aid began to flow into 
Israel , in effect reducing the cost of security to the Israeli taxpayer. 

56 Salvation in Blood and Fire 

Consequently, the establishment doves had no practical 
arguments against holding on to a Greater Israel extending from the 
Golan Heights in the north to the Red Sea in the south, from the 
Jordan in the east to the Mediterranean in the west; this seemed to 
be feasible at a little cost in life or money. Although they could point 
out the risks, both political and moral, entailed in the creation of a 
bi-national state, their arguments carried little weight against the 
advantages inherent in the status quo : the security zone provided by 
the conquered territories and the increased supply of manpower 
needed by a growing economy. Many members of the doveish 
opposition therefore quit the political arena, where disputes are 
settled by votes on the basis of more or less rational arguments, and 
moved into another arena, in a sense a pre-political one: that of 
protest, where individuals form ad hoc groups, and where the 
criterion for success is the ability to attract attention. 

Thus, for example, seventy high school graduates from Jerusalem 
sent a letter to the Prime Minister in the spring of 1970, before their 
call-up in the IDF. They wrote, ‘We do not know whether we shall 
be able to do as we are ordered in the army, under the slogan, 
“There is no choice’” . The occasion for this letter was Prime 
Minister Golda Meir’s refusal to permit Nahum Goldman, the 
President of the World Jewish Congress, to visit Cairo and sound 
out President Nasser as to the possibility of negotiations with Egypt. 
It should be added, to emphasise the astonishment provoked by the 
letter, that the signatories were sons of the social elite, which had 
taught them unconditional patriotism, and they included the son of 
a future minister, the son of an eminent professor at the Hebrew 
University, and so on. Traditionally young men of that kind had 
served in elite infantry and naval units and as fighter pilots. Now 
they voiced doubts concerning the rightness and morality of the 
Israeli cause and their own willingness to follow orders unquestion- 

While some of those about to be called up and sent to the front 
were expressing their protest in advance, those who had already 
been there sang The Song of Peace’ at the tops of their voices. This 
song had been written by a soldier who lost a leg, someone who 
indeed knew what he was talking about — and the death of young 
men in the prime of their lives, death stripped of the romance of 
battle, has always drawn a response from the civilised world. Hence 
the powerful resonance it struck among the social elites. A 
journalist later recalled an evening in an army camp where a 

Salvation in Blood and Fire 57 

convention of Nahal (army units spending part of their service as 
farmers on collective settlements) was held, and where those 
present, from the commanding officer of Nahal to the least of 
privates, not to speak of the guests, all sang The Song of Peace’ with 
enthusiasm. Further protest against the never ending war was also 
expressed in a play called. The Queen of the Bathtub’. Unlike The 
Song of Peace’, the play, whose author called it a satirical review, 
was not greeted with tolerance, almost certainly because of its 
coarse language, taken from the graffiti on the walls of public 
lavatories. But the content of the play was authentic, and perhaps 
the coarseness as well, an expression of the brutality of war. At any 
rate, Israeli society was not pleased with its own face in that mirror, 
whether it was accurate or distorted. The playwright, Hanoch 
Levine, did not dwell only on the war: most of the scenes dealt with 
subjects like man’s inhumanity to man, ethnic discrimination, the 
exploitation of the Arabs, or simply spiritual emptiness. But what 
struck an especially raw nerve was a take-off of the Bible story in 
which Abraham prepares to cut the throat of his son Isaac for 
obscure reasons, closing his ears to the voice of God, who offers him 
a ram in place of his son. The message got across but the playwright 
also explained, for the benefit of the obtuse, that he was referring to 
fathers who sent their sons to die in battle, unwilling to hear about 
other ways of settling the dispute with their neighbours. 

The protest activities had several common traits, including the 
rejection of values which had hitherto been immune from public 
questioning, such as Israel’s rightness in the dispute with its 
neighbours, the main issue of which was, according to the common 
view, the Jewish state’s right to exist, and the readiness to die in 
battle symbolised the Israeli’s moral superiority to his neighbours 
(rather ingeniously, it was held that the fallen died so that the nation 
might live). Moreover, doubts arose as to the morality of co- 
existence between people living in material plenty, the soldiers 
existing in the shadow of death along the cease-fire lines, and the 
exploited Arabs in the occupied territories. Like the awakening to 
the issue of ethnicity and poverty, which also began in the early 
1970s, anti-war protest too was a fashionable import. The United 
States, the source of all political and cultural imports since the 
1960s, was in the throes of a political crisis in the early 1970s — 
perhaps the deepest of its post-civil war history — as a result of a war 
which it could not win but was loath to lose. Demonstrations by 
veterans, the burning of draft cards, and the return of medals were 

58 Salvation in Blood and Fire 

the identifying marks of a political crisis which produced a counter- 
culture of protest which expressed itself in every walk of life. The 
American example provided models of protest and triggered similar 
processes in Israel. One cannot understand the protest movements 
in Israel after the Yom Kippur War without seeing them as a 
continuation of what had begun to grow up at a time when 
consciousness of military superiority was still a treasured possession 
of the Israel public. 

US Aid 

The United States provided vital aid to Israel at its inception: 
diplomatic recognition and a loan of $100 million during its first 
year, without which the new state would have had a hard time 
getting through the early stages of self-construction. The aid was 
given primarily thanks to the lobbying of the large and influential 
Jewish community, but also in no small measure because of the 
general sympathy enjoyed by Israel in the country at large — as 
opposed to the business leaders and the political community — due 
to its democratic character and its image as a brave, pioneering 
nation. However, the two countries kept their political distance: the 
American Jewish community assumed the task of providing 
economic assistance to their brethren in Israel, but the US super- 
power remained aloof. American business leaders and the military 
and political establishment, amply represented at the higher levels 
of the State Department and the Pentagon, had always been 
dubious about Israel, believing that unduly close relations with the 
country would interfere with their ties with the Arabs. This chilly 
attitude suited Israel’s Prime Ministers during the 1950s. Apart 
from David Ben-Gurion’s non-committal exploration of possible 
adherence to NATO, no one in Israel advocated close political ties 
with the United States. 

However, Soviet penetration in the area, starting in the mid- 
1950s, caused a change on both sides. The US political establish- 
ment, or rather parts of it, began to show a strategic interest in Israel 
because of its geographical position. Israel too felt the need for a 
defence against the overwhelming power of the Soviet Union, 
which was demonstrating increasing hostility towards the Jewish 
state which it had helped to bring into being no less than the United 
States. The Six Day War and its outcome turned Israel into a 

Salvation in Blood and Fire 59 

regional power, but it also exacerbated Soviet hostility. Hence a 
mutual interest developed on the part of Israel and the United 
States, an interest which received tangible expression in President 
Johnson’s promise to supply Israel , for the first time in the history of 
relations between the two countries, with first-line weapons 
systems. Phantom fighter planes. 

However, the fundamental shift in relations between the two 
countries took place later, during the Nixon Administration. 
Involvement in the war in Vietnam and the social unrest that 
plagued the United States deepened in the 1960s, affecting its global 
status adversely. President Nixon, more than his predecessor, 
recognised the need for alliances to plug strategic gaps left by the US 
withdrawal from full global deployment. Israel, in its status as a 
regional power after the Six Day War, fitted Nixon’s definition of a 
force that could assist in establishing and maintaining a barrier 
against the further expansion of Soviet influence in various parts of 
the world. 

As for Israel, apart from its leaders’ fears of the Soviet Union, it 
was confronting an insoluble problem as a result of the arms race 
that had begun immediately after the end of the battles of 1967: 
Israel lacked the necessary economic resources to maintain a 
military counterpoise, both quantitatively and qualitatively, to the 
Arab nations. American Jewry was unable to come to the rescue; 
from 1968 onward defence costs rocketed, reaching levels far above 
what had been known or expected in the past. An article by the 
present writer in Haaretz on 20 March 1970, defined the problem 
and proposed both a solution and the steps that should be taken to 
achieve it. The article is presented here in its entirety because it 
offers a fairly precise programme for deepening co-operation 
between the superpower and the country that later came to be seen 
as its representative in the Middle East, and the programme 
remains valid to this day. 

Characteristically, relations between Israel and the United 
States are either in a state of euphoria or abysmal darkness. At 
the moment we are close to the low point, but will assuredly rise 
again — according to the strange laws governing these relations 
— and then we shall plunge into the depths again, and so on. 

But more important than these swings is continuity over time 
and the sum total in substance of our bond with America. The 
United States has stood by us since our declaration of indepen- 

60 Salvation in Blood and Fire 

dence, assisted the establishment of our economy, and helped us 
to produce and purchase means for the defence of our state. It is 
doubtful whether there are many other countries which, without 
a treaty of any kind between them, have created such a firm bond 
between them as the United States and Israel. 

This is the background to the ongoing debate regarding the 
fighter aircraft. One might hazard a guess based on twenty-three 
years of history, that until the Americans receive Soviet and 
Arab assent to the Rogers Plan, they will continue to assist us as 
they have done in the past. At the moment it is too soon to discuss 
how they might act if and when they receive that assent; Israel’s 
political leadership should give some thought to the matter and 
plan countermeasures in advance. But in the meanwhile it is 
better for operational policies to be based on the assumption, 
commonly held by most Israeli politicians in any case, that the 
Russians and the Arabs do not favour Secretary of State Rogers’ 
proposals. Thus in a while we shall once again be asking how 
much and what kind of assistance we can request from the United 
States, with a decent chance of our request being granted. 

In last Wednesday’s issue of Haaretz an article from the New 
York Times was quoted, reporting reasons given by US officials 
for their rejection of Israel’s request for aircraft. Among other 
things the article says that, in their opinion, ‘America cannot 
keep supplying weapons [to Israel] for ever’. This is idle chatter, 
however, for the quantities of weapons requested by Israel are 
small if a cost-benefit comparison is made between US supplies 
to Israel and to any other country. The question is not only about 
weapons but also about the creation of conditions which will 
allow Israel to stand firm as long as an environment conducive to 
negotiations rather than confrontation has not been created in 
the Middle East. 

To be specific: we must emphasise our need for economic 
assistance at a rate of about $250 million a year for as long as our 
war with the Arabs continues. It is not only the pilot in his plane 
who fights but also the nation for which that pilot fights. There is 
no logical reason to harm the nation so long as it is agreed that the 
pilot must continue his task. 

Although for the time being our request for the fighter aircraft 
was rejected, this should not weaken our resolve concerning the 
larger issue of assistance. From the political point of view this 
issue is no less sensitive. The Arabs too are circulating in the 

Salvation in Blood and Fire 61 

West with their hands outstretched. As for explaining our needs 
in the United States, since in the final analysis the American 
taxpayer will be called upon to subsidise some of our expenses, it 
would seem that the matter is less difficult than it seems to many 
of the best among us. This does not imply that the money is there 
for the asking. It would be more correct to say that the presen- 
tation of reasonable requests combined with the raising of 
support among American public opinion and in the Congress 
(which is responsible for public expenditures) can produce the 
desired result. 

Israel enjoys a degree of public credit among the Jews of 
America and among many non-Jews too. Like all credit, it is not 
unlimited. If one draws against it, by causing the absence of some 
congressmen from a speech by the President of France, for 
example, it is doubtful whether a sufficient amount will remain to 
motivate those same congressmen to vote in favour of economic 
aid to Israel. That is a schematic description of how political 
credit is drawn down and it suggests the conclusion that Israel 
must act according to a well thought out order of priorities if it 
wishes to obtain what it really needs from the United States. 

Our first argument should be that a long war demands plentiful 
resources. Judging by the history of the Second World War, not a 
single country, except for the United States, was able to pay for 
the war on its own. Great Britain had to sell its assets and resort 
to American assistance; the Germans and the Japanese 
plundered the countries which they conquered, and even the 
Soviet Union requested and received aid from the West. This 
generalisation also applies to Israel. It paid for the Six Day War, 
speaking in general terms, by eliminating unemployment and by 
using up stocks. But the aftermath demanded resources which 
even the extremely generous contributions of the Jews in the 
diaspora cannot provide. 

In the long term — and that is the term which our leaders 
advise us to consider — economic assistance is no less important 
than aircraft and tanks. However, an impression has been 
created, perhaps erroneously but nevertheless effectively, that 
we are only interested in weapons and not in resources in the 
broader sense of the term. One of the most important tasks of 
Israeli policy should be to make America attach greater impor- 
tance and urgency to economic aid and to persuade the administ- 
ration to honour our requests. 

62 Salvation in Blood and Fire 

Obviously certain subjects under discussion between the 
United States and Israel should not be aired in public. In any 
case, silence does them no harm. However it is doubtful whether 
economic assistance belongs to that category, and it would seem 
that the subject ought to be given proper publicity. Here too one 
must act prudently. Just prior to the congressional elections 
(which will take place this November) may seem a poor time to 
make requests necessitating the allocation of public funds. But a 
tactical consideration of this sort should not prevent public 
discussion of the issue. Candidates, especially in areas where 
Israel is popular, should be made to take a position on it. That is 
not objectionable. In fact it is the only way to make the US 
administration act: public opinion must be influenced before the 
President and congressmen can relate to any issue, be it the 
construction of a highway between New York and Los Angeles 
or aid to Israel. The money we need does not grow on trees, nor 
is it allocated in consequence of private conversations between 
the Ambassador, Yitzhak Rabin, and officials in the State 
Department or the White House. 

No one can claim, as could have been claimed a year ago, that 
Israel is seeking aid but living a life of luxury. Anyone with eyes 
to see and a bit of economic knowledge can understand that the 
policy known as a package deal imposes considerable hardships 
on the country and shows, that Israel is prepared to make 
sacrifices before it requests assistance. Israel must speak out 
about this and about its firm decision not to relinquish any 
territory before peace is assured. This is also the prevailing 
opinion in Washington. We must stress this consensus as long as 
it exists and ask the United States to aid us both politically and 
materially. From the experience of the twenty-three years since 
the establishment of the state one should learn that a logical 
argument on behalf of a policy which is in harmony with 
American interests, or which at least does not contradict them, 
can yield the desired results. 

The State of Israel made a sustained effort to secure assistance in its 
protracted struggle with its neighbours and their Soviet patron. The 
United States responded, thus creating a model of co-operation 
between a superpower and its ally in the Middle East. 

Salvation in Blood and Fire 63 


1. Moshe Dayan, Milestones (Hebrew) (Adanim-Nir, Yediot Aharonot Edition, 
Tel Aviv, 1976). 

2. The 1955 Johnston Plan, negotiated by Ambassador Eric Johnston as President 
Eisenhower's special representative, superseded three projects drawn up in 1953. 
The Johnston Plan allocated approximately 60 per cent of the water of the Jordan 
River System to Lebanon, Syria and Jordan, and the remaining 40 per cent to Israel. 
Its technical aspects were approved by the Arab States and Israel, but in October 
1955 it was rejected at a meeting of the Arab League. 

3. Rafi, the Hebrew initials for the Israeli Workers List, was a breakaway group 
which seceded from Mapai in 1964, following Ben-Gurion's resignation. Among its 
more prominent members were Dayan and Peres. It participated in the 1965 Knesset 
elections, gaining about 8% of the vote entitling it to 10 members of the Knesset. It 
rejoined Mapai in 1968. 

4. See Haaretz , 9 August 1969. 



The Yom Kippur War does not belong directly to the story of the 
development of national agendas, the changes which took place in 
them and the change in government which came, sooner or later, in 
their wake. None the less the war was a historic landmark, well 
worth a brief glance, if only to observe the way two mainstays of the 
Jewish state functioned under stress. After the publication of the 
first part of the Report of the Commission under the chairmanship 
of Supreme Court Justice Shimon Agranat, appointed to inquire 
into the conduct of the war, many argued that its authors were 
excessively hard on the IDF. In that the report restricted itself to 
only three days of the war, and one front only, it could be claimed to 
have painted a distorted picture in which the errors committed by 
the IDF commanders on a single front were given too great promi- 
nence. It was further argued, and forcibly, that the IDF had been 
judged with excessive severity, and that the political leadership 
appeared to have been exonerated because the report had excluded 
the government and its functioning from the scope of their inquiry. 
However both these arguments miss the point. The Commission 
was not set up to celebrate a success, but rather to put its finger on 
the causes of a failure as perceived by the public; nor did it deserve 
to be reproached for concentrating on the period and theatre in 
which failure was most evident. As for the argument that the 
political leadership got off scot-free, it ignores the explicit 
assumption guiding the Commission, that the settling of accounts 
with the political leadership was a political matter. In fact the 
political system punished the country’s leadership soundly; a month 
after the dismissal of the Chief of Staff, the Chief of Military Intelli- 
gence, the Commander of the Southern Front, etc., the Prime 
Minister, Golda Meir, and the Defence Minister, Moshe Dayan, 
were also obliged to resign, for having had the main responsibility 
for the government’s handling of the war. The Minister of Defence, 
whom the public saw, not unjustifiably, as the man principally 
responsible not only for the management of the war but also for 
what had preceded it — including the failure to make decisions 
which might have prevented it — was more or less banished from 


Intermezzo: Into the Abyss 65 

politics. Thus it is difficult to maintain that the investigation did not 
further the cause of justice. In general terms rough and ready justice 
was done; some might even go so far as to call it a lynching. 

The Army’s Failure 

In retrospect, the army’s failure was far greater and more thorough- 
going than was suggested by the Agranat Report, especially as 
regards the first rank of commanders in the IDF. The main source of 
the failure was that the IDF had been prepared by its commanders 
for the previous war, not for the one that was actually waged on the 
southern and northern fronts in 1973. The failure had two roots: the 
military capabilities of the Arab armies were misjudged, and the 
optimal balance of forces and doctrine of warfare for the IDF were 
not achieved. There is no need to analyse the Arab armies’ military 
abilities at length: they were well trained for the missions assigned 
to them by the Egyptian and Syrian leaders. They did not break 
even when the IDF recovered after the first onslaught and began to 
force them back. In describing the war, Dayan repeatedly reports 
these two features of the Arabs’ performance. Another indication 
of their improved capabilities emerges from the considerable losses 
incurred by the IDF after it had broken through the Egyptian line at 
the Canal, when the troops began to attack the Egyptian rear. At 
that stage of the battle, typified by pursuit and raids on the enemy’s 
soft rear echelons, the IDF suffered serious loses: Dayan speaks of 
eighty to ninety casualties a day. This was in dramatic contrast to the 
experience of the Six Day War, which had provided the model for 
the IDF command. In that war, once the enemy lines were penet- 
rated, their armies simply fell apart. 

The second error also belongs to what has been defined as 
planning for the previous war. A structure of forces and combat 
doctrine which had been valid in 1967 were applied to an army 
which was obliged to fight under completely different conditions, 
especially with regard to the battlefield function assigned to the air 
force. The Six Day War was already virtually over in the early 
morning hours on 5 June, when the Israeli air force destroyed those 
of Egypt, Jordan, and Syria. Afterwards the Israeli ground troops 
could advance freely on all fronts, whereas the Arab armies were 
exposed to attack from the air. The assumption that the air force 
could serve as airborne artillery in any war against the Arab armies 

66 Intermezzo: Into the Abyss 

became an unquestioned axiom and a major component of the IDF 
combat doctrine. 

In his book mentioned earlier, Basic Surprise, Tsvi Lanir 
describes war games conducted under the revealing code name of 
iron Ram’ by Southern Command in the summer of 1972, about a 
year before the war. These war games were predicated on an 
opening hypothesis which could rightly be called prophetic: four 
infantry divisions and nearly 400 enemy tanks were assumed to have 
crossed the Suez Canal with an advance warning of twenty-four 
hours; IDF reserve divisions did not enter the battle until the third 
day of the war. However, — and here is the difference between the 
war games and what actually happened — by the second day the 
regular army division stationed in Sinai was supposed to have fought 
the attackers to a standstill. ‘On the third day’, Lanir continues, 
'while the air force controlled the skies over the Canal (italics added) , 
a reserve division under the command of General Adan crossed the 
Canal in the northern sector. On the fourth day, fighting had 
already begun on the west bank of the Canal’. The key lies in the 
words in italics: control of the air was a precondition for halting four 
divisions with one , and for the easy crossing of the Canal . However, 
since the air force did not control the skies over the Canal, either 
during the first days of the war or afterwards, the single regular 
army division was not strong enough to pin down the Egyptians 
once they had crossed to the east bank. Moreover, General Adan’s 
counterattack on 9 October, which was supposed to take the IDF 
across to the west bank of the Canal, was doomed to failure. 

Looking at the discrepancy between the war games and the war 
itself, the gravity of the mistaken estimate of the air force’s capacity 
becomes devastatingly clear. Strangely , the ability of the air force to 
control the skies over the battle zone was never queried, although it 
was critical in order to stop the Egyptians and to cross the Canal 
early in the war. In 1969, at the end of the War of Attrition, the 
outcome of a conflict between fighter aircraft and a dense array of 
anti-aircraft missiles and cannon was already very much in doubt. 
The IDF staff officers of the Southern Command, who wrote the 
guidelines for their ‘Iron Ram’ war games, based them on fallacious 
reasoning. In other words, they set out with the desired result, a 
quick and elegant victory for the IDF, and they derived their basic 
data from it, especially the central pre-condition, the air force’s 
absolute domination of the sky over the battlefield. This fallacy, 
shaped either by faulty logic or by intellectual dishonesty, could not 

Intermezzo: Into the Abyss 67 


fail to exact revenge on the IDF. The consequences of ignoring 
reality proved to be far graver than all the delays and negligence for 
which the Agranat Commission blamed the army command. In fact, 
there was only one front where the hopes placed in the air force as 
airborne artillery were justified: the north. When a Syrian 
armoured column came out from under its anti-aircraft umbrella in 
a hasty effort to penetrate the valley of the Sea of Galilee, it was 
caught by the air force and smashed. 

In conclusion, then, the commanders of the IDF were not 
unjustly condemned and punished. Their loss of rank and prestige 
in the eyes of the public was deserved, although, as we have noted, 
not necessarily or primarily owing to the failures enumerated in the 
Agranat Commission Report. Later, people even questioned the 
accusation that the IDF had been taken by surprise, supposedly the 
main cause for its failure during the first few days of the war. Dayan 
himself wrote in Milestones , The advance warning was brief but did 
not come too late’. In the book referred to earlier, Lanir also 
demonstrates convincingly that in the Yom Kippur War there was 
no intelligence surprise, in other words it was not a situation typified 
by ignorance of the relevant facts, the knowledge of which was 
necessary for military action. 

There is no simple answer to the question of how it happened that 
a body which, by its very raison d'etre , ought to have been charac- 
terised by harsh realism (until the Yom Kippur War the IDF 
command was rigorously realistic in outlook) came to reconcile 
itself to a structure of forces and a military doctrine which had 

I become outmoded. Certain of its officers had committed an error or 

become subject to a half-conscious self-delusion, as shown by the 
‘Iron Ram 1 war games. A basic flaw came to light which cannot be 

[ explained by the over-confidence of individuals: after all we are 
dealing here with a collective which is far from homogeneous intel- 
lectually or psychologically, and which is doctrinally obligated to act 
only after exhaustive and profound discussion prior to any decision. 
It can therefore be concluded that the entire organisation was 
affected by a collective process of deterioration in its critical facul- 
ties. This phenomenon is not unknown in cases where enormous 
success is followed by a sudden abundance in the resources available 
to an organisation — precisely what happened to the IDF between 
the two wars. 

68 Intermezzo : Into the Abyss 

The Government’s Failure 

If that was true of the IDF, is it any wonder that the entire 
government laboured under a delusion regarding the character of 
the war which broke out on Yom Kippur? In principle, the Chief of 
Staff is the government’s military adviser, and the opinions which 
were formed within the government following formal briefings were 
consistent with what the Cabinet heard in their frequent informal 
contacts with the military leadership. However, the Minister of 
Defence, who wielded decisive authority within the government on 
war matters, and who was also a military authority in his own right, 
and, moreover, a sceptical and inquisitive person by nature, ought 
to have noticed the dubious reality underlying the reassuring 
answers given by the military leaders to questions asked by the 
political leadership concerning the nature of the war which was 
liable to break out in 1973. And he failed in this — certainly in Miles- 
tones there is no evidence of doubt, if indeed he harboured any prior 
to the war, either with regard to the standard appraisal of the Arab 
armies’ military capacity or to the IDF’s force structure and current 
doctrine of warfare. Dayan was not alone in this failure, although 
his acceptance of what was brought by the Chief of Staff to his 
attention or for approval was decisive. Thus, for example, Yitzhak 
Rabin 1 who was Chief of Staff during the Six Day War, in his 
memoirs, Service Record . does not challenge either the IDF’s 
routine patterns of thought or their obsessive attachment to the Six 
Day War as the only possible model of a major war with the Arab 
nations. This is particularly surprising since in his memoirs Rabin 
repeatedly emphasises the poor results of the air war over the Suez 
Canal before the cease-fire agreement of August 1970. Thus both 
Dayan and Rabin reveal the same blind spot: they did not see what 
was right in front of their eyes. And if that was true of men like 
Dayan and Rabin, it is not surprising that the entire government 
failed to come to grips with military reality until the war made it 
terrifyingly clear. 

At the conference held in the early hours of Yom Kippur between 
the Minister of Defence and the Chief of Staff, and during their 
subsequent joint meeting with the Prime Minister, there was 
tension, but certainly no undue worry. In both instances the atmos- 
phere was businesslike as they discussed the extent to which the 
reserves were to be called up. There was no dramatic confrontation 
as was reported later orally and in writing in discussions of the 

Intermezzo: Into the Abyss 69 



events of the war. Indeed the conference could not have been 
anything other than businesslike as it was not concerned with any 
particularly pressing question, given the estimate of the situation 
underlying the ‘Iron Ram’ war games according to which the regular 
army division in Sinai together with the air force would be able to 
halt the Egyptian attack. In any case, the reserve divisions were not 
meant to enter the battle before the third day of the war. Those 
responsible for the conduct of the war, the Defence Minister and the 
Chief of Staff representing the defence establishment, and the 
Prime Minister, joined by Ministers Yisrael Galili and Yigael Allon, 
civilian members of the government who also possessed military 
experience, were mainly concerned with the politics of the 
impending battle: issuing a warning to Egypt and Syria and 
refraining from steps, such as a pre-emptive air strike against Syria, 
which might have given the impression to the United States that 
Israel had initiated the hostilities. However, no one involved in the 
matter could have believed that it was possible to halt the two Arab 
war machines by issuing a warning or by offering assurances as to 
Israel’s peaceful intentions: the Jordanian example in the Six Day 
War should have taught them that gestures of that kind had no 
military value. Nevertheless, Dayan has written that in view of what 
the government was told on the subject, it decided that issuing such 
an assurance might still be useful. 

If, on the morning of Yom Kippur, those in charge of the war had 
time to engage in dubious speculation of this sort or to adapt their 
actions to the needs of making Israel’s innocence more apparent for 
propaganda purposes, that is another indication that the political 
leadership was not unduly worried, further corroborating the 
supposition implied by forecasts about the war then current in the 
IDF and the government (They start the war, we halt them, we hit 
them hard from the air, we destroy their missile batteries and 
artillery — then we go over to the offensive’, in Dayan’s words). Not 
only that; as Henry Kissinger relates in Years of Upheaval , 2 the 
messages that reached him from Israel were full of self-confidence 
up to the reversal on 12 October. 

None the less, behind the mask of serenity and the illusions about 
an easy way out of the renewed military confrontation, the 
government which met to take decisions on the evening after the 
Yom Kippur fast was consumed by doubt and confused about the 
policies to be adopted towards the Arab states. The ministers knew 
full well that in Egypt voices had been raised in favour of coming to 



70 Intermezzo: Into the Abyss 

terms with Israel — and Egypt was recognised as setting the tone on 
the Arab side. The ministers viewed this development as confir- 
mation of the doves’ position that there might be an opening on the 
Arab side, and that Israel must bear some of the blame for the 
renewed war because of its intransigence. This view was held in 
particular by the ministers representing the views current in Israel 
before 1967, such as the Minister of Finance and the Foreign 
Minister. The Prime Minister, Golda Meir, was bound to be aware 
of these opinions, but she could not shake off the influence of hawks 
like the Defence Minister. However, Dayan himself was torn 
between two truths: in his heart of hearts he knew that Egypt would 
never agree to an indefinite IDF presence on the banks of the Suez 
Canal; but on the other hand he insisted on remaining in Sharm Al- 
Sheikh, in an offensive position across from the soft underbelly of 
Egypt. Beyond all this, the government was also aware of the 
political futility of military victory: Israel did not want additional 
territory, it knew the danger facing the IDF if it had to occupy the 
densely populated west bank of the Suez Canal, and it had certainly 
learned from experience that holding on to a territorial bargaining 
counter did not necessarily promote a political settlement. 

It seems that this ambivalence among the key personalities and 
various groups of ministers was no less responsible for the 
development of an atmosphere of panic between 9 and 14 October 
than was the disappointment with the course of the battle or the 
dismay at Israeli losses of men and material. On 9 October Henry 
Kissinger concluded that Israel had suffered a strategic defeat in the 
wake of the counter-attack by two reserve divisions, a poorly co- 
ordinated operation in which many casualties were incurred and 
which was repulsed by the Egyptians. He also sensed the desper- 
ation beginning to pervade the country, notwithstanding the 
optimistic official reports. On that date he told the Israeli ambas- 
sador in Washington: ‘Israel will have to pull itself together and 
overcome what is beginning to look like incipient chaos’. In fact, on 
12 October Israel asked the United States to negotiate a cease-fire 
in place, resigning itself to the Egyptian gains. 

It is not too fanciful to say that, had another government been in 
power at the time, the opening stages might have looked very diffe- 
rent. The errors committed by the government of Golda Meir were 
elementary, although her cabinet included men with military 
experience and knowledge of international politics. She and her 
colleagues failed to understand that there was no contradiction 

Intermezzo: Into the Abyss 71 

between willingness to come to political terms as proposed by 
President Sadat and going to war in order to improve those terms, 
nor was she sufficiently sceptical about the advice she received from 
the high command of the IDF and the Ministry of Defence. In 
addition, there was the process of erosion to which the government, 
having been in power too long, was subject, and disagreement 
among its leading members on fundamentals: a tried and true recipe 
for military and psychological setbacks — the chaos of which 
Kissinger had spoken. Hence there is reason to believe that the 
subsequent events of the war — the military recovery, the passing to 
the counter-attack in the north and south, the crossing of the Suez 
Canal and the surrounding of the Egyptian Third Army — were 
largely due to the free hand given to the IDF. The ultimate course of 
the war was dictated by the operational commanders of a supremely 
effective war machine which rapidly adapted to a battlefield reality 
substantially different from that which it had expected. The political 
leadership tagged along behind the army rather than directing it 
and, lacking moral and spiritual resources, it was incapable of 
providing support and inspiration to the army in the field. In other 
words: the Yom Kippur War lacked the Moshe Dayan of the Six 
Day War. The man was still there, but his spiritual power had 
declined; he no longer inspired confidence or radiated leadership. 

There is no satisfactory answer to the question of why the public 
did not settle accounts with the Labour government for the 
dangerous failures in its functioning during the Yom Kippur War 
and remove it in short order by voting for Gahal (the early version of 
the Likud). Some people attribute this failure to the powerful 
systemic shock from which the voters had not yet recovered 
between 24 October, the date of the ceasefire in the south, and 31 
December 1973, election day. Moreover, since fighting continued 
in the north, the people may have been naturally reluctant to rock 
the boat. Other observers believe that it was the promise implicit in 
the convening of the Geneva Conference, an Arab-Israeli peace 
conference under joint US and Soviet chairmanship, based on 
Security Council Resolution 338, which persuaded the dwindling 
majority of voters to maintain their traditional loyalty to the 
coalition headed by the Labour Party, which favoured going to 
Geneva. Possibly both these causes were at work simultaneously. 
However, it quickly became apparent that peace, as the Israelis 
understood the word, was not in the offing, and the voters soon 
began to drift away from Labour. Deepening alienation from its 

72 Intermezzo: Into the Abyss 

rule was openly expressed by protest groups which surfaced and 
directed their fire particularly against Moshe Dayan. He was held to 
be chiefly responsible for the management of a war in which every- 
thing had taken place contrary to expectations, and following which 
it was clear that Israel would have to part with territorial bargaining 
assets which were supposed to be bartered for peace, without, 
however, receiving the peace it wanted in return. The broad 
outlines of partial settlements began to emerge in the negotiated 
separation of forces agreements in the north and the south. Israel 
had to give up a central article of its political faith, namely, that the 
IDF would not withdraw a single step except in return for peace. 
Golda Meir’s government was now agreeing to withdraw from 
broad expanses of territory in return for merely observing the cease- 
fire — and everyone realised that this would be the pattern of the 
process developing from Henry Kissinger’s shuttle diplomacy. 

Thus the bankruptcy of the Labour Party’s policy became clearly 
visible. It had previously enabled the party both to carry out the 
national agenda of territorial aggrandisement and to delude itself — 
and to delude the devotees of little Israel, pre-5 June 1967 vintage 
— with the hope that sooner or later Israel would free itself of the 
territories and return to business as usual on the pre-war pattern: 
building the economy and promoting social welfare. It was the 
bankruptcy of that policy no less than the Agranat Commission 
Report, that forced Prime Minister Golda Meir to resign and to 
abandon hope of re-establishing the government with Moshe Dayan 
as Minister of Defence. 

The new Cabinet installed by the Labour Party bore the imprint 
of four men, Yitzhak Rabin, Shimon Peres, Yigael Allon, and 
Yehoshua Rabinowitz, new faces at that level of government. 
Although warmly greeted by the public, within a short time it 
became clear that the new government suffered from the same split 
personality that had crippled all Labour governments since the Six 
Day War. The national agenda centred around borders, and 
territorial expansion, and whatever followed from these priorities 
was never acceptable to many of its leaders. In order to stay in 
power, the Labour leadership had previously reconciled itself to the 
current political fashion and granted its prophet, Moshe Dayan, a 
position and authority which he deserved neither by virtue of his 
standing in the party hierarchy, on the one hand, nor as a reward for 
his heretical views, on the other. Nevertheless, Dayan’s removal did 
not solve the problem either, because, after the end of the Yom 

Intermezzo: Into the Abyss 73 

Kippur War, circumstances dictated the liquidation of the legacy of 
the Six Day War. Willingly or not, the government remained preoc- 
cupied, under heavy pressure from friends and foes alike, with the 
issue of the borders. Since it was guided by a national agenda whose 
principal goal, even after the war, was to retain as much territory as 
possible under Israel’s control, it invested the greater part of its 
efforts in striving towards that goal, despite a continuously 
worsening international climate. The alternative, namely to 
conclude that the war left the Arab states no choice other than to 
reconcile themselves, if only de facto , to Israel’s continued existence 
in their midst, and that, in consequence, it was possible to return to 
the old national agenda, remembered from the great decade of 
Mapai between 1949 and 1959, was not even considered. Perhaps 
the objective conditions for such a change of course were not yet 
ripe. At any rate, the government concentrated its energies on 
finding a solution to the issue of territories and borders, although 
three of its four key men, the Prime Minister and his Foreign and 
Defence Ministers, were divided between their desire to retain as 
much territory as possible, as befitted the national agenda, and the 
inner urge to free the country of the 1967 war and the burden of its 

The international community had wasted a lot of time and effort 
up to then, and has continued to do so ever since, in reproaching 
Israel for holding on to the conquered territories. One could 
speculate as to what might have been achieved if a mere fraction of 
that effort had instead been invested in urging the Arabs to do 
something practical about their vague notions of reconciling 
themselves to the existence of Israel. One could also imagine the 
direction events might have taken if President Sadat had gone to 
Israel while the Rabin government was in power. In that case the 
government and the public would probably have been able to rid 
themselves of the demon of borders and territories and to concen- 
trate on a national programme with a different character from that 
which had guided the country since 1967. The Rabin government 
was tireless but had no luck at all. Nevertheless it never threw up the 
sponge: in the incessant turmoil between one of Henry Kissinger’s 
nerve-racking visits and the next, the government not only carried 
on with its task of restraining inflation and staunching the outflow of 
foreign exchange, but also managed to reform the tax system and 
introduced a value added tax, steps which previous, more powerful 
governments had not dared to take. 

74 Intermezzo: Into the Abyss 

These reforms indicate the residual presence of the pre-war 
(Mapai) component in the government’s repertory of ideas, which 
had survived during the ascendancy of the national agenda focused 
on borders and territories. Moreover, until 1977, the election year, 
the economic leadership under Yehoshua Rabinowitz, a veteran 
member of Mapai, never ceased talking economic sense to the 
public, or demanding sacrifices in order to improve the economic 
situation. However, the dichotomy — territory versus economic 
and social reform — laid bare the seams holding together the two 
elements in Labour: those who accepted the 1967 version of the 
national agenda, and those who remained true to the old faith of the 
past decades. These seams were never very strong, and they ripped 
apart under the combined pressure of external and internal events. 

Cases of corruption were uncovered right and left during the 
Rabin administration, hastening its disintegration. Corruption was 
far from unknown in Israel : it had been imported both from Eastern 
Europe and the Middle East. However, its main cause lay in the 
influx of large, uncontrolled funds: when bureaucracies are called 
upon to distribute enormous sums of money, some of it inevitably 
sticks to the fingers of the people handing it out. But now a new, 
previously unknown or at least unpublicised kind of corruption 
came to light. The people chiefly implicated were members of the 
political elite: for example, Michael Tsur, one of Pinhas Sapir’s 
closest assistants before his appointment as head of a large private 
corporation, and, even more so, Asher Yadlin, another of Sapir’s 
trusted associates and a central figure in the Histadrut economic 
organisation, who was just about to be appointed Governor of the 
Bank of Israel. The death blow to the public’s confidence in the 
integrity of its political elite came with the rumours of bribery, 
which were never proved, associated with the Housing Minister, 
Avraham Ofer, who subsequently took his own life. The matter of 
Prime Minister Rabin’s legally questionable dollar account 
probably did little harm to the party, for one cannot damage what 
has already been destroyed. 

At this time a new party came into being, the Democratic 
Movement for Change, with a political programme based on the 
desire to clean up society and rid the government of corruption. The 
movement was really a pressure group disguised as a political party, 
but before shattering to bits, it managed to attract many former 
Labour supporters, thus hastening Labour’s downfall. 

Intermezzo: Into the Abyss 75 


h He was later Israel's Ambassador to the United States and Prime Minister 

2. Henry Kissinger, Years of Upheaval (Little Brown and Co., Boston, Toronto 



The turn-round of 1977 was late in arriving. Some time between 
1960 and 1965 the coalition led by Mapai had exhausted the voters' 
patience, having worn out its political substance and accomplished 
the national agenda with which it was identified. In the following 
years it was stopped in its programmatic tracks and had to deal with 
matters to which it was unaccustomed, and which it found 
distasteful. But it kept its head above water by means of its will to 
survive, by adapting itself to the new winds which had begun to blow 
in Israeli society, and by using the knowledge and experience in 
government which the party and its representatives had garnered 
during its many years of leadership in Jewish Palestine and Israel. 

Its political skill was especially evident in the period between the 
Six Day War and the Yom Kippur War, in its adoption of Moshe 
Dayan, who at that time was a national hero, pioneering the 
formation of a new national agenda. It was helpful to the party that 
Dayan, for sentimental reasons and because of his background, was 
willing to hitch himself to its wagon, although the squeak of its rusty 
axles was audible from afar. He himself had never been one to build 
up political power, preferring to let others work to mobilise the 
political power he needed to accomplish what he had at heart — 
tracing out new borders and forging the conditions necessary for 
practical co-existence between the Jewish administration and its 
Arab subjects within the Land of Israel . For, as he said, The highest 
goal is to make the new territories into Israeli territories.' In order 
to retain power and enjoy its fruits, the Labour Party not only 
reconciled itself to the constraints of implementing this national 
agenda, but also to the acceptance of political values alien to a 
significant portion of its supporters. It even went so far as to include 
Dayan’s comrades from the Rafi faction within the front rank of its 

Economic Infrastructure 

Mapai, later the Labour Party, had already come to the end of the 


Challenge and Conquest 77 

line politically in the early 1960s. It had also given the economy a 
structure foreign to its elitist conceptions. Later on we shall discuss 
the outlines of the party’s economic policy in some detail; what must 
be said here is that the man who increasingly made his mark on 
economic thought and activity, Pinhas Sapir, understood that his 
main task was to provide employment for a growing population. 
When he was appointed Minister of Commerce and Industry in 1955 
he took it upon himself to provide jobs in manufacturing, recog- 
nising that the process of absorption in agriculture had reached its 
limits — in no small measure because of the restrictions imposed on 
its further development by limited water supplies. Sapir achieved a 
historic success: people had jobs and were working for a living, for 
better or worse, and thus a primary tenet, in the Labour Zionist 
creed was implemented — the turning of untrained people, in most 
cases unaccustomed to physical labour, into operatives in farming, 
construction or manufacturing — what for want of a more elegant 
phrase we shall call ‘productivisation’. In the process of its 
implementation, Sapir sought the assistance of those who, for lack 
of a more precise term, must be called entrepreneurs. Most of them 
were men blessed with a talent for locating public funds buried in 
the small print of budget documents. Once found, they proposed to 
the various ministries the use of such funds for the setting up of 
industrial plant, offering employment to a certain number of people 
and commensurate profit for themselves. The preference for 
entrepreneurs of this sort, rather than bureaucratic initiative, on the 
part of a government called socialist by its rivals and critics — and 
which also saw itself in that light — is indicative of Pinhas Sapir’s 
ideological outlook, and in fact that of Mapai in general. The result 
was predictable: under Mapai rule, thanks to the largesse of the 
‘number one patron’, Pinhas Sapir, an entrepreneurial class began 
to grow and prosper; it also sought to justify the economic advan- 
tages it enjoyed by increasing business efficiency, by improving the 
quality of its products, by increasing competitive ability in export 
markets, and so on. To achieve these ends it borrowed freely from 
concepts taken from another social ethos, best called entrepreneu- 
rial, and foreign to Israel, which had previously clung to egalitarian 
pioneering values. Some time during the 1960s Pinhas Sapir’s 
entrepreneurs succeeded, largely with the support of academics and 
media people who viewed this social development with favour, in 
imposing their concepts and values on Israeli society. Under their 
influence the economy changed from a system aiming at the 

78 Challenge and Conquest 

maximisation of employment and as egalitarian an income 
distribution as possible, to a system in which the guiding principles 
were efficiency and profitability. In other words, the economic 
policy of Mapai, i.e. Sapir, lent the economy a decidedly entrep- 
reneurial cast. 

In the mid-1960s therefore the economic infrastructure was ready 
and waiting for a new national agenda compatible with its entrep- 
reneurial character, as demanded by the economic creed of the 
General Zionist element of Gahal and also of the ‘bourgeois’ 
component of the Herut party. The Six Day War and its aftermath 
added the practical elements needed to make the nationalist, expan- 
sionist national agenda a realistic one. It also seemed that an organi- 
sational alternative to Mapai had emerged: Gahal, established in 
early 1965, became a force around which an alternative government 
could coalesce. Why then was there no change in government? A 
partial answer to this question has been offered earlier in this book, 
but that answer is less than satisfactory. It is indeed hard to explain, 
let alone justify in retrospect, the continued survival of a regime that 
had little new to offer and whose energies exhausted themselves in 
the day-to-day operation of the machinery of government. One 
might add here that it is unfortunate that the Labour regime 
outlived its usefulness. It is doubtful whether the evils that befell 
Israel in the Yom Kippur War would have happened under a 
government more alert to the danger of Arab attack: and, to give 
the hypothetical Likud government the benefit of the doubt, it 
might have been more willing to question the conventional military 
wisdom, something which the Meir-Dayan government lacked the 
moral courage to do. 

The International Dimension 

It is possible that the reason for the survival of the Mapai-Labour 
government and the delay in the Likud’s rise to power should be 
sought beyond Israel’s borders and also in the way the reactions of 
the outside world to the protracted struggle in the Middle East were 
perceived in Israel. The Labour party, which was basically 
isolationist and inward-looking, was also understood to favour a 
friendly attitude to the gentile world and a willingness to 
communicate with it on the basis of its values at a time when 
liberalism and social democracy were in the ascendant. As long as 

Challenge and Conquest 79 

the world reciprocated with sympathy and warmth — the victory in 
the Six Day War brought a feast of love for Israel — the mutual 
approval served as a justification for the Labour government, which 
was known to be committed to the maintenance of such a policy. 

But the Yom Kippur War found a world out of patience with 
Israel; in the western media the Arab attack was reported with 
jubilation, and US efforts to resupply Israel during the war encoun- 
tered obstacles, even to the extent that West Germany, then 
regarded as wholly subservient to the United States, mustered the 
courage to refuse to allow the use of US airbases on German 
territory to refuel the cargo planes flying in emergency supplies for 
the IDF. Then came the oil crisis, and with it the West’s discovery of 
‘Arab rights’; and even before the Arab attack, the African states — 
admittedly not in the first division internationally — broke off 
diplomatic relations with Israel. There was also the campaign of 
vilification in the United Nations, which struck the Israeli public 
like a bolt from the blue. The climax of this campaign was the 
passage on 11 November 1975 of the resolution against Zionism, 
which was termed racist, by a large majority in the UN General 
Assembly. The picture of a pistol-packing Yasser Arafat, speaking 
from the podium of the General Assembly and receiving a standing 
ovation from the delegates, utterly destroyed the Israeli public’s 
faith in international co-operation and the usefulness of maintaining 
a friendly dialogue with other countries. As a result, Israelis lost 
confidence in the government and the party identified with this 
policy. Menachem Begin’s Likud promised to change Israel’s 
relations with the rest of the world and to put them on a basis of 
confrontation, in which the most determined would triumph. This 
contributed to his rise to power. 

It has been noted earlier that, when the Likud took power in 
1977, it was not called upon to innovate. The substantive change in 
policy, namely the replacement of the Mapai national agenda of the 
first decade of the state, best summed up as ‘a little Israel minding its 
own business’, had already taken place ten years before Menachem 
Begin was sworn in as Prime Minister. But although the Likud did 
not innovate, it did refine and concentrate the issues, leaving no 
room for obscurity and the misunderstandings that blurred the first 
version of the greater Israel. 

An editorial in Haaretz the day after the 1977 elections described 
the change, which had placed the Likud at the centre of a ruling 
coalition in place of Labour, as follows: instead of a policy of 

80 Challenge and Conquest 

political agreements which is perceived ... as a policy of unilateral 
withdrawal ... a large number, possibly the majority, of Israel’s 
citizens want a firmer posture towards the outside world’. Labour 
was displaced because the general public believed that it and its 
government had reached the end of the road, not only from a 
programmatic point of view but also functionally: the signs of disin- 
tegration, moral, political, and organisational, were too apparent 
and too numerous to be ignored. However, the public did not vote 
for the Democratic Movement for Change, but for the Likud, 
because it wanted a more straight-backed posture vis-a-vis the 
gentiles — not only the Arabs — and the coalition headed by 
Menachem Begin looked like promising precisely this. And the 
public was not disappointed: the upheavel of 1977 led to a 
significant change in Israel’s relations with the rest of the world, the 
outcome of a deliberate effort with which the new Prime Minister 
must be credited, or, as the case may be, blamed. 

Menachem Begin was assisted by a historic development. The 
war in Vietnam and the energy crisis considerably weakened the 
position of the United States in the world, and this did not pass 
unnoticed in the Middle East, where, from Israel’s point of view, 
the US had played the role of global policeman, responsible for law 
and order, the arbitrator and umpire in local disputes. The Vietnam 
War revealed the United States as harbouring imperialist ambitions 
without imperial firmness. In other words, it was not prepared to 
make the sacrifices necessary to achieve its ambitions to impose 
settlements and to appoint rulers according to its understanding of 
its own national interest. However, it was still strong enough to 
bring pressure to bear on Israel to adopt certain policies, inasmuch 
as the rest of the world was on the American side. Having perceived 
these fundamental facts, Begin then took the first of the four basic 
decisions which marked his period of rule. This was the decision to 
seek agreement with Egypt so as to achieve room to manoeuvre in 
order to strengthen Israeli rule over the entire Land of Israel, up to 
the Jordan. In this he acted like a chess player who sacrifices a 
knight to gain a better position for his queen. President Sadat’s 
initiative, generally regarded, and not without reason, as the action 
which altered the whole course of events in the region, took place at 
an opportune time from Begin’s point of view, and while others 
were still concerned with preparations for the first meeting between 
the Egyptians and Israelis after Sadat’s visit to Jerusalem , which was 
to take place in the Egyptian town of Ismailia, he rushed to 

Challenge and Conquest 81 

Washington with an autonomy plan which he himself had drafted, in 
order to prepare the ground for the exchange he had in mind. 

At this point it is proper to clarify the difference between Begin’s 
model and Dayan’s earlier one, of a national agenda based on 
expanding Israel’s borders. Dayan’s image of Israel included a 
stronghold on the Gulf of Suez as well as military rule over the Land 
of Israel, but without interference in the daily life of the Arab 
population. In contrast, Begin never saw the Sinai or any part of it as 
territory vital to Israel : he was prepared to fight for the maintenance 
of an Israeli presence in Sinai, but for a dual purpose. He wanted to 
show his own people, and the rest of the world, that Israel had 
stopped making easy concessions, and that anyone who wanted to 
obtain something from Israel would have to pay the full price for it. 
The question of whether or not he was right in estimating that, for 
Israel’s peace and security, occupation of the Land of Israel up to 
the Jordan was preferable to a strong presence in Sinai, is still being 
debated in the political community. However, from his point of 
view, this question simply never arose. There were several reasons 
for this. The issue of the legal status of the Land of Israel is still 
open, while that of Sinai is closed, in that the peninsula has been an 
acknowledged part of Egypt since the beginning of the century. 
Further, if the Sinai is demilitarised, the threat on the southern 
border seems less than that on the eastern border, which is much 
closer to the heart of Israel. Above all (and the Prime Minister’s 
reasons are presented here in ascending order of importance), 
Begin came to power essentially because of his faith, which had 
hardly been eroded since the day he first entered Israeli politics, in 
the historical, even the divine, right of the Jewish people to the land 
of its fathers, at least as far east as the Jordan. Therefore, when he 
realised that he could not have both Dayan’s outpost at the southern 
tip of Sinai and the Land of Israel, he unhesitatingly chose to 
sacrifice the Sinai in order to win the Land of Israel. It should be 
noted here that the momentous alliance between Begin and Ariel 
Sharon (Minister of Agriculture in the first Begin Government) was 
struck at this point: Sharon was the man to whom the Prime 
Minister telephoned at a critical moment in the negotiations with 
Presidents Sadat and Carter at Camp David, in order to get his 
approval for relinquishing the Sinai Peninsula, including its military 
air bases and the civilian settlements there. Sharon gave his 
blessing, thus putting the Prime Minister in his debt, and he 
repeatedly drew against that credit until it was exhausted with the 

82 Challenge and Conquest 

massacres at Sabra and Shatila. 

Begin’s underlying model for the agreement with Egypt was 
never in doubt. On the one hand, he followed the general rule laid 
down by his predecessor, Yitzhak Rabin, who had held that it was 
possible to come to a separate agreement with Egypt. On the other 
hand, he was guided by his intuitive sense of the limits of American 
power, expressed in the United States’ unwillingness to impose a 
comprehensive settlement on the area, although it wanted one. He 
also believed it was possible to make a deal with Sadat that would 
give Sinai to the Egyptians and Palestine to Israel. The recurrent 
crises marring the peace talks in the period between Sadat’s visit to 
Jerusalem and the signing of the treaty in the White House, about a 
year and a half later, occurred because of the firm position taken by 
the Prime Minister: he insisted on a full recompense to Israel in 
return for giving up Sinai . Begin never considered any change in the 
formula, ‘Leave me something in Sinai and I will make things easier 
for you in Palestine’. His conception of the essence of the deal with 
Egypt was absolutely straightforward: just as Sadat insisted that he 
would not concede ‘a single inch’, so Begin held fast to his position. 
His concessions with regard to the text of the Israeli-Egyptian peace 
treaty were merely verbal, and the treaty was never intended to be 
amenable to a loose interpretation. 

Perhaps this is the place to note that Begin’s speeches extolling 
peace, his main argument in support of the peace treaty with Egypt, 
enhanced his status among the general public in Israel. Along with 
their idea of Israel as a regional power and with their desire to give 
the gentiles their come-uppance for their hostile and insulting 
attitude towards Israel, the people also longed for peace. But 
Begin, despite what he said — which more than once aroused suspi- 
cions that a sworn pacifist stood at the head of the Likud govern- 
ment, heralding once again the prophetic vision of eternal peace — 
remained true to himself: a social Darwinist, a man who could bear 
witness, on the strength of the horrors visited upon himself and his 
family, that force was preferable to moral superiority. The seven 
years of his rule as Prime Minister go to prove this: he took Esau’s 
blessing for Israel, ‘By the sword thou shalt live’. 

The Settlement Policy 

However, at the same time as he decided to abandon the idea of 

Challenge and Conquest 83 

maximal expansion of Israel’s borders and to concentrate on laying 
the formal foundation for Israeli rule over western Palestine, 
including the achievement of international recognition as conferred 
by the peace treaty with Egypt, Begin also made another decision 
with regard to the method for actually imposing Israeli rule. He 
chose, in prima facie surprising fashion, the method of settlements. 
What was surprising about this decision was its deviation from 
Jabotinsky’s 1 revisionist ideology. The position of the revisionist 
movement with regard to land settlement varied between lack of 
interest and condemnation for two main reasons. One of them is 
presented by the historian of the movement. Dr Yakov Shavit: 2 

From the time of its first founding in the middle twenties until the 
middle thirties, and also afterwards , the social composition and 
political structure of revisionism did not permit constructive land 
settlement. . . . The leaders of the movement in Europe 
naturally could not be involved in settlement, nor did they wish to 
be. (italics added) 

Along with the objective circumstances of the time and the personal 
tendencies deriving from them, their basic political idea of the way 
to take control of the country also played a role in the revisionists’ 
indifference and negative attitude towards land settlement. 
Jabotinsky’s followers believed that the only immediate task 
incumbent upon Zionism was the establishment of Jewish 
sovereignty in the country: hence their emphasis on the need to 
create a Jewish military force and to achieve the appropriate under- 
standings with the mandatory power. Settlement in various parts of 
Palestine seemed of secondary importance to them, a wasted effort, 
something that would follow upon seizing power, which was their 
first priority. In this the Jabotinsky school differed from its Labour 
rival, whose method was to achieve Jewish control over Palestine 
based on the purchase of land and settlement on it: parcel by parcel, 
acre by acre. 

Dayan’s concept, based on the imposition of military control over 
Judea, Samaria, and the Gaza Strip and excluding Jewish 
settlement in areas heavily populated by Arabs, was thus the 
legitimate descendant of Jabotinsky principles. Moreover, it was in 
harmony with the declared tenet of the revisionist movement, 
namely, that the Arabs were to be citizens with equal rights under 
Jewish sovereignty. This principle implied that they were entitled to 

84 Challenge and Conquest 

a sufficient reserve of land to absorb the Arab population, assuming 
that they would not wish or be able to settle in the midst of the 
Jewish population. Dayan’s position implied that a state in which 
two nations lived side by side, a bi-national state, which logically 
should have been acceptable to him as well as to all of Jabotinsky’s 
disciples, could not exist in peace, unless friction between the two 
alien ethnic components were prevented. However, Begin adopted 
the method of massive land settlement in the midst of the Arab 
inhabitants as a means of imposing Israeli control over all of western 

Such a substantial deviation from Jabotinsky’s views would 
hardly have been feasible, if a body which was not part of the Likud 
organisation had not come forward to implement Begin’s 
settlement policy. This organisation, Gush Emunim (The Bloc of 
the Faithful), was not the one which decided upon the policy; rather 
it was Begin who perceived that the Bloc would be a useful tool to 
implement it, and already some time before the 1977 elections he 
had decided to make use of it. On 20 May 1977 the future Prime 
Minister went to a temporary encampment of Gush Emunim in 
Kadum to take part in celebrations over the arrival of a Torah 
Scroll, and in a short speech he promised that there would be many 
more new settlements. In making this promise he was not shooting 
from the hip (in general it should be remembered that Begin was not 
one to shoot from the hip) but giving well-considered advance 
notice of policies that would be executed. And he did in fact execute 
them. The peace treaty with Egypt and the concessions in the 
autonomy plan which were wrung from him by joint efforts of the 
Egyptians and the Americans made the Prime Minister regard it as 
even more pressing to hasten and expand the settlement effort 
because of doubts about the permanence of the Israeli military 
presence in Judea, Samaria, and the Gaza Strip. In other words, 
Begin, the disciple of Jabotsinky, came to adopt the classic Labour 
Movement doctrine of conquest through land settlement, thus 
launching one of the more conspicuous changes of the past decade. 
This course of action, quite apart from its political effects, forged 
another link in the alliance between Menachem Begin and Ariel 
Sharon, the champion of the conquest of the Land of Israel by 
means of populating it with Jews. Sharon was Gush Emunim’s man 
in the government and a past disciple — not surprisingly — of the 
Palestine Workers’ Party, Mapai. 

Before inspecting Gush Emunim more closely, let us briefly sum 

Challenge and Conquest 85 

up the political balance-sheet with regard to Begin’s second funda- 
mental decision. Along with the clear advantage, from his point of 
view, of a highly visible defiance of world opinion, it strengthened 
Israel’s claim to permanent ownership of the whole of the Land of 
Israel, in terms of population. However, he paid a stiff price in 
rousing the Arab population from its dormant state since the 1967 
defeat and provoking acts of violent resistance; he tacitly 
encouraged some settlers to resist the civil authority and to launch 
acts of counter-terror against the Arabs. He also polarised the 
nation; it should be recalled that the resignation of two of his senior 
ministers, Moshe Dayan and Ezer Weitzmann, was a direct or 
indirect outcome of this decision. Thus if ever there was a union of 
opposites, the curse of a blessing, that phrase certainly applies to 
Begin’s decision to abandon his revisionist faith and to convert to 
that of the Labour Movement, by adopting their method of 
imposing Israeli rule on the whole Land of Israel. 

Gush Emunim 

Gush Emunim is a powerful expression of the frustration and 
resentment aroused among orthodox Jews by the secular environ- 
ment. It is not the only such expression, but it was singularly suited 
to the national agenda which began to guide the state after 1967, 
centred upon expanding Israel’s borders. It is noteworthy that the 
issue was territorial expansion in general, not merely control of the 
Land of Israel. The first demonstration by Gush Emunim, in 1974, 
was directed against the IDF withdrawal from the western, African 
bank of the Suez Canal. Again, a bitter battle was waged by Gush 
Emunim against the withdrawal from the Yamit region although 
that town, just south of the international frontier with Egypt, has no 
historical connection with the land of the patriarchs which, 
according to Rabbi Yehuda Kook, in his tract. Thou Shalt Not 
Fear’, it is forbidden to return to the gentiles. Thus Gush Emunim is 
not a religious version of the Society for the Land of Israel, 3 but a 
body which sanctifies every conquest, no matter where. What 
distinguishes it from other expansionists is that it uses quotations 
from Scripture, the Talmud, and Rabbinic commentators in order 
to justify its expansionist ideology, which is essentially pagan. 

In his ‘Gush Anthem’, the poet Yitzhak Laor brought out the 
sources of that frustration and resentment: 

86 Challenge and Conquest 

We are the knitted skullcaps. No one calls us religious jerks any 

They don’t pull our hair fringes, they don’t kick us out of the 

Games. They don’t call us baby rabbis, for we are soldiers 
In the army of the Lord of Hosts, the Israeli Defence Force, and 
we take revenge 

For everything they did to us here in the land of our exile, for all 
the lies they told about us, for all 

They accused us of falsely, killed us, persecuted us, and laughed 
at us . . . 

Now it happens that Yitzhak Laor is not an orthodox Jew, and it is 
unlikely that he has personally experienced what orthodox Jews go 
through, particularly orthodox Jewish children . But with his artistic 
talent he was able to portray the inner experience of such people 
with marvellous accuracy. The world of orthodox Jews is subject to 
constant tension between the obligation to resist a world full of 
hostility and temptations and remain within the four confines of a 
way of life based on the 613 commandments of the Jewish law, and 
the impulse to succumb to temptation, to become involved, even to 
become a leader, if only to teach errant people to live according to 
the Torah. 

The strong urge to break out of the walls of the ghetto of the 
believers and into the Jewish ghetto surrounding it, is not peculiar to 
Israel, although the continued existence of the ghetto within an 
independent Jewish society is unique. While secular Jews have 
achieved national redemption through the State of Israel, that 
redemption has neither reached the orthodox nor affected them. To 
this the orthodox community has reacted in various ways: by 
denying the redemptive pretensions of the secular Jewish state, 
along with a quiet but stubborn effort to win back those who are ripe 
for religion; or, alternatively, by joining in those actions of the 
secular Jews which fit in with the religious tradition, initiating 
contact at points of proximity with those who dwell beyond the walls 
of the religious ghetto. 

The latter was the path taken by the National Religious Party and 
the synagogues, houses of prayer, and the yeshivot (rabbinical 
colleges) under their patronage. The community which they served 
reconciled itself to the secular state and apparently to the leading 
role played by the secular elite in the life of that state. The NRP 

Challenge and Conquest 87 

segment of orthodox Jewry limited its demands to the particular 
needs of its community (the sabbath, kashrut, laws governing 
personal status, etc.). The secular leaders of the state were prepared 
to respond generously to these demands. The arrangement, which 
became institutionalised in the course of time under the name ‘The 
Historic Alliance between the Labour Movement and the Mizrachi’ 
(the forerunner of the NRP), did not change the reality of the 
ghetto, which derived from the self-segregation of a community 
which could not, because of the obligations and prohibitions of the 
Torah, act according to the values of a modern secular society. The 
religious public remained a minority, one that felt different; the 
orthodox also experienced frustration deriving from their inability 
to live like everyone around them and from being denied 
advancement within the secular society on equal terms — a denial 
which was felt especially in public life. The sense of being excluded 
did not bring peace even to those who identified wholeheartedly 
with the national goals of the secular state, until a substantial change 
occurred in the secular camp which permitted the orthodox to widen 
the breach in the walls of their ghetto. 

This change originated in the disappointment, which was not 
peculiar to Israel, with welfare democracy and the affluent society 
which, in one form or another, had dominated the West, including 
Israel, since the end of the Second World War. People discovered 
that social equality entailed the bureaucratisation of life and the loss 
of solidarity based on shared hardship. As for material plenty, it was 
also found to be a mixed blessing. For example, the slogan ‘A Car 
for Every Worker’ fired the imagination, but its implementation 
produced unbearable air pollution and traffic jams which turned the 
use of private automobiles into a nightmare. In the Western world, 
of which Israel is a part, doubts have arisen as to the blessings of 
egalitarianism and its influence. In the 1970s these doubts were 
strengthened by economic difficulties, mass unemployment, and 
decline in real incomes, a phenomenon unknown and unexpected 
since the 1950s. Events within Israel only exacerbated the feeling of 
disappointment: one war opened up a path leading the Jewish 
people to its ancient past, but a second war and its aftermath 
returned it to the reality of the existential fears which had pursued it 
throughout the centuries of exile. The veteran leadership disap- 
pointed the country, in that the material paradise it offered proved 
to be both unstable and subject to dangers from within and without. 
In these circumstances it is no wonder that, increasingly, people 

88 Challenge and Conquest 

yearned for the stable values of religion and tradition, the land and 
the Bible. In the 1970s secular Israel was prepared to heed new 
messages, even if the ‘new’ was in fact as ancient as the people itself. 
The encounter with religion in an aggressive, nationalistic guise was 
natural and unforced. The heads of Yeshivas and their students in 
the NRP were not mistaken when they began to discern the signals 
of redemption, not only in the broad national sense, but also in the 
sense of redeeming the orthodox community from its isolation 
within its cultural and social ghetto. 

Nor was it all talk; they were ready to act. Gush Emunim, which 
grew up and organised itself within the NRP yeshivas , was an 
instrument in the hands of its teachers and rabbis with which to 
breach the walls of the ghetto and meet with the secular community 
which had become receptive to messages invested with the 
venerable and sacred authority of the Torah. Moreover, this time 
the orthodox set out on an equal footing with the secular majority: 
Gush Emunim was created to march in the van, and it carried out 
the task assigned to it by its teachers. It assisted in the campaign to 
discredit the Labour leadership which had remained loyal to the 
values and national agenda of the 1950s. It helped Menachem Begin 
and his companions prove the nation’s vitality by challenging the 
outside world, the gentiles, who doubt the right of the Jewish state 
to exist, and it set forth to carry out the Biblical commandment, ‘and 
thou shalt inherit it’, with reference to the entire Land of Israel. The 
spiritual leaders of Gush Emunim, NRP politicians like Zevulon 
Hammer, and secular Jews on its fringes like Ariel Sharon , who had 
close links with it, had the right to expect that the Gush would lift 
them to the pinnacles of power, thus doing away once and for all 
with the handicaps hampering religious politicians. In the past they 
had been limited to begging for budgetary allocations for their 
yeshivas , but kept at a distance from the highest levels of govern- 
ment. This was no longer to be the case. 

Much has been said of the burning idealism motivating members 
of Gush Emunim — a virtue which, even among the non-orthodox, 
invested them with the aura of the pioneering settlers of the 1920s 
and 1930s. However, closer inspection of their beliefs reveals an 
ideological uni-dimensionality: once the element of nationalism is 
removed, the body is left without a soul. 

The difference is evident if one compares today’s West Bank 
settlements — emanations of Gush Emunim’s central doctrine — 
with the settlements of the 1920s and 1930s. At that time too the 

Challenge and Conquest 89 

settlers saw themselves as emissaries of the people, but they 
undertook to satisfy additional ideological demands, which took 
more than just settling the land to fulfil. They took it upon 
themselves to pioneer a unique way of life which would stand a 
prolonged economic test; a settlement which could not support 
itself over time, was regarded by its members, as well as by the 
people around them, as a failure. The two forms of co-operative 
agricultural settlement, the kibbutz and the moshav , therefore 
served more than one purpose: they expanded the geographical 
area of Jewish settlement, they contributed to the health of Jewish 
society (by reversing its inverted occupational pyramid), and they 
increased (at any rate, they were meant to increase) the economic 
self-sufficiency of the Yishuv. Above and beyond all that, they 
created a unique pattern of social organisation. The settlements of 
Gush Emunim do not have ambitions of that sort: they are 
‘community’ settlements with no more positive social content than 
an urban co-operative apartment house in a neighbourhood with a 
higher than average rate of violent crime. Clearly such a bond is 
insufficient to assure prolonged communal life. There is less 
likelihood than in the case of the early settlements that the Gush 
Emunim settlers will remain cohesive, for they are bound together 
only by the thread of nationalism. 

Along with ideological poverty in the secular realm, the situation 
of the Gush is also tenuous from the religious point of view. In his 
book on Gush Emunim, 4 Tsvi Raanan quotes a conversation with a 
member of the secular Kibbutz Meuchad movement, now an 
activist in the nationalist Tehiya party, who was enthralled by the 
charms of Gush Emunim. He said, ‘I told them in a discussion, . . . 
I’m much more extreme than you when it comes to the Land of 
Israel, because I can’t be sure the Third Temple [i.e., the modern 
State of Israel] won’t be destroyed. You have an alternative. If, 
perish the thought, the Third Temple actually is destroyed, you 
believe that the business will carry on’. Apart from his faulty logic, 
the speaker was also wrong with regard to the religious survival of 
the Gush. True, ‘the business will carry on’ from the point of view of 
Jews like those in the ultra-orthodox neighbourhood of Meah 
Shearim in Jerusalem or in Bnei Brak, gathered at the opposite pole 
of orthodox Jewish life. From their point of view the ‘destruction of 
the Third Temple’ would simply reveal the Sabbatean s nature of 
Gush Emunim. However, the teachers of Gush Emunim hold that 
the people of Israel are already living at the time of the advent of the 

90 Challenge and Conquest 

Messiah, and that, on the divine timetable, the countdown towards 
redemption has already begun . Redemption has clear criteria in the 
Jewish tradition. From the point of view of the traditional, if the 
Third Temple is destroyed, the ‘business’ is over. Gush Emunim 
will be swallowed up in the shadowy limbo of religions, exactly like 
the representative of Tehiya whose secular world was destroyed. 

Judaism is for the tough-minded, not for the squeamish. Turning 
the other cheek is a late invention, never assimilated by the faith. 
Thus Gush Emunim is no exception: Rabbi Levinger and his flock 
flaunting Kalatchinkov submachine guns in Hebron fit easily into 
the spiritual landscape of the community they claim to represent. To 
be fair to it, the violence of Gush Emunim is all-embracing: both 
Jews and Arabs have suffered its blows. 

In the meantime, the crime of the attack against the mayors of 
Nablus, Ramalla, and Al-Bireh has been purged, vindicating those 
who always claimed that a concerted effort and the investigative 
methods generally employed in such cases would discover the 
perpetrators among the settlers in the West Bank. But strong-arm 
methods were used against Jews as well, few of us will forget the 
battle for Yamit. It was waged without fire arms, but the term 
‘battle’ is appropriate for the ardour and tenacity of the violent 
struggle waged by members of Gush Emunim against the army 
which came to evacuate them from Yamit. It was only blind chance 
that prevented severe physical casualties, even death, among the 
soldiers. Gush Emunim, as we said, maintains the tough-minded 
tradition of the Jewish people. 

Some people are of the opinion that the violence accompanying 
public struggles in Israel is the particular contribution of the 
Oriental Jews, who brought with them in their baggage, it is said, 
the customs common in the Arab world. For instance, the people 
who broke up Labour Party rallies during the 1981 elections 
screaming ‘Begin, Begin’ were mostly Oriental Jews. However, 
they had predecessors who were born in Israel, and, in fact, even 
earlier, in the courts of the various Hassidic Rabbis in Eastern 
Europe, where it was accepted practice to stone members of rival 
courts and secular Jews. Young men wearing the long black coats of 
the ultra-orthodox or the knitted skullcaps of the NRP youth 
movement were the true setters of precedent, against which the 
amateurish howling of a few rowdies at Labour Party rallies pales 
into insignificance. 

The star of Gush Emunim, which rose at a dizzy speed during the 

Challenge and Conquest 91 


troubled times after the Yom Kippur War, now shows signs of 
waning. The Gush reached its zenith under the first Begin Govern- 
ment, when it took it upon itself to be the chief executor of the 
policy of populating Judea, Samaria and the Gaza Strip. Now it is no 
longer needed; and has been put aside because of a change in the 
task in hand. Nevertheless, there is no doubt that Gush Emunim 
was an outstanding feature of the period during which Menachem 
Begin was in charge of the implementation of the national agenda. 
It arose out of confusion and loss of direction, and at its end it faces 
a blank wall of disappointment; but it is an authentic Israeli and 
Jewish phenomenon whose roots penetrate far down into the soul of 
the people. 

Action Against the PLO 

As noted above, Menachem Begin’s first decision on taking power 
was to create the international legal background for the 
entrenchment of Israeli rule over Judea, Samaria, and the Gaza 
Strip; to that end he strove for a separate peace with Egypt. His 
second decision, made at the same time, concerned the method for 
exercising that control. He chose, perhaps because the path of 
formal annexation was blocked, the method of land settlement, 
following the model created by the Labour Movement, which he 
detested. In both decisions he was assisted by Ariel Sharon, first, in 
authorising the abandonment of Sinai and second, in organising and 
fostering the settlement campaign of Gush Emunim in the eastern 
regions of the Land of Israel and in the Gaza Strip. When, in 1981 , 
he was re-elected as Prime Minister, he saw that the time was ripe to 
settle accounts, his own and those of Israel, with the other claimant 
upon Palestine, the PLO. 

People still wonder why he chose to make war, although he took 
care to disguise it as a form of police action which would last only a 
few days. The question is apt, given the nature of the PLO’s threat 
to Israel and the assessment of the danger it posed. According to 
some people, the PLO problem is a political one, and cannot 
therefore be solved by military means. However this sounds like 
quibbling rather than facing up to facts. Begin may have been within 
his rights in viewing the military actions taken by the PLO — incur- 
sions into Israel for the purpose of committing highly visible acts of 
terrorism or attacking people or other targets abroad — as the 

92 Challenge and Conquest 

foundation upon which the Palestinian organisation had built up its 
international position. If Israel were to destroy its military bases in 
Lebanon, the PLO would no longer be able to point to the various 
acts of the Palestinian guerrilla groups as reminders to the world 
that their resistance was still alive. If Israel succeeded in destroying 
the bases themselves, then the Arabs in Palestine and the Arab 
states which subsidise the PLO would cease to provide moral and 
financial support. As for the rest of the world, it regarded the PLO 
leadership as a kind of Palestinian government in exile, which was 
close to achieving its goals; it too would follow the Arab example. 
For that matter, Menachem Begin never took the view, and rightly 
so, that force cannot solve political problems; for he had seen with 
his own eyes how force had destroyed the state in which he was born 
and brought up, and how it had literally annihilated the ethnic basis 
on which he had hoped to establish the sovereign Jewish state in the 
Land of Israel. 

One must not attribute the plan to go to war in Lebanon to these 
considerations alone. (Like most clever politicians, Begin often 
tried to kill as many birds as possible with one stone.) Thus, for 
example, according to a report in the special supplement published 
by the daily paper Maariv on 3 June 1983, the first anniversary of 
Operation Peace for the Galilee, the Prime Minister had proposed 
to his Cabinet colleagues that Israel should go to war in reprisal for 
the world’s unanimous rejection of Israeli annexation of the Golan. 
The report further states that he had considered going to war in 
Lebanon as early as March 1982 in order to test Egyptian intentions 
and their commitment to the peace treaty with Israel. What was not 
reported, though it seems probable, is that the initiators of the 
proposal, the Defence Minister, Ariel Sharon, and the Chief of 
Staff, Rapahael Eitan (who depended on the support of the Prime 
Minister, as Maariv comments), planned to help Begin in his efforts 
to wipe out the depressing impression left in the public mind, 
especially among Likud supporters, by the evacuation from Sinai, 
including the military airfields and the settlements in the Yamit 
region. A victory over the PLO seemed to be tailor-made for that 

One way or another, Begin could depend on his alliance with 
Sharon. He knew from experience that there were opponents within 
the Cabinet to a large-scale military action in Lebanon, and that, in 
order to stifle that opposition, he needed allies. Ariel Sharon had 
proved himself a faithful and effective ally both in authorising the 

Challenge and Conquest 93 

withdrawal from Sinai and in implementing the policy of settling 
Judea, Samaria, and the Gaza Strip. Even though Begin, while 
doubling as Minister of Defence from 1979 until the elections of 
1981 , had suffered from Sharon’s aggressive and insulting criticisms 
(at the time he described Sharon privately as a great general but a 
vicious person), he reckoned that Sharon would outweigh all the 
other hesitant ministers in the government. He therefore shifted 
Sharon from the Ministry of Agriculture to the Defence Ministry — 
a great sacrifice on his part, for it is well known that Begin had fallen 
in love with the ministry and made himself at home there. However, 
he clearly believed that the achievement of his aim was worth the 
sacrifice. From the Prime Minister’s point of view, the move was 
certainly the correct one: Sharon wanted a war in Lebanon, 
although his reasons for launching the campaign were not entirely 
identical with those of Begin. The absence of complete agreement 
explains why the war spread beyond the goal set by Begin, which 
was essentially to deal a death blow to the PLO’s military infrastruc- 
ture. Since that aim was also part of Sharon’s conception of the war, 
and since Begin lacked not only military experience but also 
strategic imagination, he could not foresee the complications which 
were liable to arise as a result of deviation from his original plan. 
Doubtless Sharon and the third in the group of decision-makers, the 
Chief of Staff Eitan — without whose unequivocal support the 
government might have refused to grant the Prime Minister the 
authority to start the war — did not make it clear to Begin that the 
agreement between them was incomplete, nor the results which 
were liable to follow from this. 

By the very nature of the alliance between Begin and Sharon, the 
Prime Minister took it upon himself to provide political cover for 
the planned war, in Israel, within the ruling coalition, and interna- 
tionally as well. The Defence Minister was free to develop the 
operational plan, by turns concealing and revealing the expected 
moves demanded by his conception. However, his general 
approach and modus operandi were well-known even before he 
began speaking freely about a military action; they were described 
in an article which the present writer published in Haaretz on 28 
August 1981 , a few days after Sharon’s appointment as Minister of 
Defence, entitled Tigers Don’t Eat Grass’. 

This article linked Sharon’s efforts to establish Israeli control 
over Judea, Samaria, and the Gaza Strip with his aim of dealing a 
crushing blow to the PLO by driving its fighters away from the 

94 Challenge and Conquest 

northern borders of the state. That is is consistent with the 
American aim of driving the Soviets out of the region’. The means 
would be the IDF, ‘to be used in order to clean out the area’. In 
other words, no more raids from the air and the sea, or incursions on 
land, but a massive campaign of ground forces for the purpose of 
crushing and eliminating the enemy. 

Incidentally, it is worth giving another quotation from the article 
because of the light it sheds on subsequent events: ‘It seems that Mr 
Sharon will be surprised ... by the inconsistency of his inter- 
locutors (the Americans)’. This inconsistency was revealed when 
the United States refrained from declaring its support for Israel in 
response to the Soviet warning against continued attacks on the 
Syrian army at the end of the first week of Operation Peace for the 
Galilee, during the siege of Beirut, and also after the IDF entered 
the Lebanese capital. 

Two conclusions emerge from the article: in 1981 Sharon’s plan of 
the military operation had not yet been fully formulated to include 
the removal of the Syrian army from Lebanon; further, at this time 
there was no US plan for what should be done in Lebanon. 
However, perhaps influenced by Major-General Eitan, the removal 
of the Syrians from Lebanon by dealing a stiff blow to their forces 
there subsequently became an integral part of Sharon’s plans, equal 
in importance to the original goal, the destruction of the PLO 
command and the physical removal of its leaders. Moreover, the US 
Government was also obliged to take notice of the impending war 
on Israel’s northern border, to no small degree because of the 
pressure of the Israeli Defence Minister, who gave lectures on his 
operational plans in Lebanon, illustrating them with a map spread 
out for the convenience of his listeners; among others he spoke to 
both the senior staff of the American Embassy in Israel and 
Administration officials in Washington. In any case, Begin, Foreign 
Minister Shamir, and Sharon lost very few opportunities of 
explaining to the Americans that their intention of settling accounts 
with the PLO in Lebanon was serious; and finally the United States 
got the message. As to the operational agreement between Israel 
and the Reagan Administration, there are differences of opinion. 
Some people point to the explicit US reservations about Israeli 
military operations in Lebanon, which were given wide publicity by 
the use of deliberate leaks from closed meetings; others hold that 
Israel, that is, the Prime Minister and the Defence Minister, had 
sound reasons to believe that the Lebanese operation enjoyed 

Challenge and Conquest 95 

support and even sympathy among the American leaders, especially 
the influential Secretary of State, Alexander Haig. 

Before the curtain rose on the Lebanese drama, this is how the 
scenario appeared to the principal players. Menachem Begin saw 
very clearly the expulsion of the PLO from the vicinity of the border 
with Israel, and in more hazy outline, the destruction of its military 
and political infrastructure. Ariel Sharon saw the IDF’s conquest of 
Beirut, assisted by those whom he viewed as the fighters of the 
Maronite militias; at the same time, he clearly envisaged the rout of 
the Syrian army and its being driven out of Lebanon. At the same 
time the US Administration , that is, those of its representatives who 
were involved in the matter, projected a picture of Lebanon ruled 
by a pro-Western government, after the PLO, a Soviet ally, had 
suffered a military defeat and lost its status in south Lebanon. As 
later emerged from a remark made by Secretary of State Haig in a 
conversation with the Israeli ambassador in Washington, the US 
Administration was pleased — in keeping with the logic of the 
overall approach of the United States applied to the conflict in the 
north-eastern corner of the Mediterranean — with the blow which 
Israel dealt to the Syrians, the proteges of the Soviet Union. (‘You 
are doing great and important work for everybody in Lebanon’, 
Haig is reported to have said.) The differences in the scenarios were 
ultimately to make the package fall apart. The Americans, as is their 
wont, wanted an independent Lebanon liberated from the PLO 
(and the Syrians), but they did not agree to the brutal methods, such 
as those adopted by the IDF during the siege of Beirut, however 
necessary they might have been to achieve their goals. Similarly the 
campaign against Syria, which Sharon regarded as essential and 
which he conducted more often than not by misleading his 
colleagues and the Prime Minister (whose understanding of the 
operational logic of military moves was minimal), strained to the 
breaking point the bonds of the alliance that had been forged 
between the Minister of Defence and Menachem Begin. 

The Failure of the War 

The opening moves of the war vindicated the high hopes of its 
initiators: the PLO was routed and ejected from southern Lebanon, 
the air force smashed the Syrian air force and knocked out the anti- 
aircraft missiles deployed in the Beka Valley, thereby exorcising the 

96 Challenge and Conquest 

fears left over from the Yom Kippur War. The number of 
casualities, although higher than predicted, was still within 
tolerable limits when compared to the results. Not surprisingly, 
these successes were followed by self-congratulatory declarations 
by the Prime Minister and the Minister of Defence. However, after 
a fortnight the campaign stalled: the IDF found it difficult to cope 
with the problems inherent in conquering a major city held by 
guerrilla fighters who knew how to exploit the cover of its buildings 
and ruins; the number of casualties began to slip out of control; in 
the international arena Israel was overwhelmed by a well orches- 
trated campaign of hatred of an intensity unknown since the dark 
days of the UN resolution identifying Zionism with racism. The 
Americans quickly abandoned the sinking ship and initiated 
contacts with the PLO and Jordan, from which the Reagan Plan 
emerged later on; in Israel, public opinion became solid against the 
war, for after August 1982 it achieved nothing but further casual- 
ties. There is reason to believe that even if the Kahan Commission 
had not come up with its findings regarding the responsibility for the 
massacres in Sabra and Shatila, Sharon would probably have been 
forced to face public judgement. 

Menachem Begin, who apparently sincerely believed that the 
campaign in Lebanon would proceed in line with his conception of 
it, removing the PLO from its territorial bases with the precision of 
a surgeon’s scalpel, in other words, without involving Israel in a 
costly war or causing a rift with the United States, did not find it 
difficult, when the Kahan Commission pointed an accusing finger at 
the Defence Minister, to cut his links with Sharon. However, justice 
is not always done or seen to be done; thus Begin was applauded at 
the time for getting rid of Sharon, although he was actually evading 
his own responsibility as the initiator of a war that was ending badly. 

In retrospect, the failure of the war, the price of which was greater 
than the benefits it brought, is attributable to two fundamental 
flaws: the Israeli public was not morally prepared for it — which is 
not surprising, considering that its goals were not agreed upon even 
between the Prime Minister and the Minister of Defence; and there 
was no full discussion with the United States, whose assistance was 
vital in the international arena, in which only elements hostile to 
Israel were then active. But while Begin was not immediately called 
to account for his misjudgments, for the like of which Golda Meir 
was removed from office, they continued to dog him and later 
brought about his disappearance from the national stage. 

Challenge and Conquest 97 

On 20 August 1982, the last month of his Lebanese euphoria, 
preceding the months of remorse and depression which overcame 
him after he learned of the Phalangist massacres in the Palestinian 
refugee camps, Menachem Begin gave a lecture at the National 
Defence College, in which he responded to the arguments against 
the war with the PLO which he had unleashed in Lebanon, thus 
anticipating the harsh criticism which was later to be directed 
against him. Begin’s thesis is summed up in the conclusion to the 

It follows, both on the basis of international relations and as a 
result of our own national experience, that we are not obligated 
to make war only when there is no other alternative. . . . Such a 
war might end in disaster, if not holocaust, for any country, and 
cause dreadful casualities. . . . It is incumbent upon a free nation 
. . . concerned for its security, to create the conditions such that 
its wars, if it must fight them, will not be fought in the absence of 
an alternative . 

Begin’s final emphasis was misplaced, however: his opponents 
and critics disagreed with the necessity of the war in Lebanon, not 
with the principle that when vital interests are at stake, and when 
the enemy is about to start a war, it is permissible, even imperative, 
to launch a pre-emptive strike. The question of whether or not to go 
to war in these circumstances is academic: politicians and their 
military advisers usually agree that in such circumstances — and this 
is what characterises them — the two previously mentioned condi- 
tions have been met. The message that the Prime Minister sought to 
insinuate into the minds of his listeners was something entirely diffe- 
rent: an application of von Clausewitz’s generalisation that war is 
the continuation of politics by other means, to the Arab-Israeli 
conflict. Or, in plain English: ‘If I have an obnoxious enemy who is 
weaker than myself but unwilling to yield, I may, even though he 
does not endanger my existence, start a war against him and 
prosecute it with every means at my disposal’. In fact, to Begin’s 
mind, the war in Lebanon was modelled on that formula. The 
historical example with which the Prime Minister sought to illus- 
trate the need for a pre-emptive attack was the salami method of 
conquest used by Hitler in Central Europe before the Second World 
War. If the French and British had made a pre-emptive move when 
the German dictator announced the cancellation of the Versailles 

98 Challenge and Conquest 

treaty, they might have successfully nipped his plans in the bud. 
However, this illustration is absurd, for there was no comparison 
between the respective strengths of the IDF and the PLO and those 
of Britain and France, on the one hand, and that which Hitler 
already possessed in 1936. In fact the Prime Minister’s reasoning 
takes us back much further than the generalisations distilled by the 
philosophers of war from historical experience. In a nutshell, what 
he said was that the strong devour the weak. The lecture was pure 
Darwin for beginners. 

The Future of Likud 

It seems that as disappointment with the war in Lebanon became 
increasingly evident — disappointment may be defined as the 
perception of the disproportion between the gains from the war and 
the price paid in terms of lives and money — the national agenda 
initially formulated after the Six Day War was nearing the end of its 
lifespan. Consequently the Likud, which was identified with that 
national agenda, had come to the point in history where Mapai had 
been after the elections of 1959: from then on the curve turned 
downwards. Two parallels might serve to illustrate the point. From 
1959 on Mapai was caught up in a ferocious fight for David Ben- 
Gurion’s political inheritance; and since early 1983 the Likud, or 
rather Herut, has been locked in a struggle for Menachem Begin’s 
political legacy. The second parallel lies in the area where the crisis 
occurred. For Mapai it was domestic matters which were the main 
focus of the national agenda peculiar to the party. The crisis took 
the form of the collapse — despite efforts to maintain them — of its 
organisational structures, and later as the recession struck, of 
beliefs in the fundamental strength of the economy. With the Likud 
the crisis was centred on foreign affairs, the struggle for territory, 
for international status, etc. Lebanon demarcated the limits of 
Israeli power. It did not necessarily follow that the end of Likud rule 
was at hand; Mapai continued to hold the reins for another decade 
and a half after it had exhausted the national agenda with which it 
was identified. But the change in government, not one that is merely 
technical in character but which signals more than the mere 
replacement of the party in power, became more likely. 

Appropriately, the Likud, or rather the Herut Movement, limits 
the demands it addresses to the country to the area of power and 

Challenge and Conquest 99 

politics: the nation must mobilise for a greater Israel and its status in 
the world — national glory, in Jabotinskian terms. For the rest, the 
Likud is permiissive in character. It does not ask for personal 
commitment as did the Labour Movement in its years of glory; it 
does not demand moral superiority in the manner of Ben-Gurion, 
who wanted Israel to be a light unto the nations; and even more 
conspicuous by its absence in the Likud’s political creed is the 
command to strive for economic independence. Menachem Begin 
coined the slogan, To do well by the people’. The actual formu- 
lation of the concept, though more obscure, is not to ask much from 
the people, but to let them act according to their own lights and 
instincts. Theoretically this suits Likud’s ideological liberalism and 
its next of kin, social Darwinism. However, the slogan needs to be 
amended to state that the poor must be attended to not only for the 
sake of humanity, but also because of their importance as voters. 

Connoisseurs of social paradox could do worse than take a look at 
Likud, especially its main component, Herut. Zeev Jabotinsky, the 
founding father and spiritual mentor of Herut, was the son of a 
wealthy Jewish bourgeois family in Czarist Russia. He himself was a 
liberal intellectual, a true fin de siecle European, victim of the 
Nietzschean fashion then current among intellectuals (see, for 
example, his definition of the national ideal in the anthem, of the 
movement he formed, ‘genial and generous and cruel’, as well as his 
enthusiasm for Italian fascism, especially for Gabriele D’Annun- 
zio). However, from the political school founded, nurtured, and 
guided spiritually by Jabotinsky, there arose a party which many 
people call populist, but which might be more accurately termed 
plebeian: its members and functionaries are run of the mill, not 
exactly the elite of the citizenry, and its leaders, with very few 
exceptions, are second-raters, not particularly well educated or 
endowed with vision. The style of public debate typical of Herut is 
well suited to its social composition: it addresses emotions and 
instincts, and its devotion to the principle of a leader, raised above 
the multitude, gave the State of Israel the kind of feebly 
authoritarian leadership which has become its trademark. 

We have so far discussed three principal decisions taken by 
Menachem Begin after taking power in 1977: the peace treaty with 
Egypt, the settlement policy and the war in Lebanon. The fourth 
decision had its roots in his permissive social outlook. It was 
implemented in two stages. First, Yigael Horowitz, the Finance 
Minister who advocated fiscal severity, was dismissed in late 1980. 

100 Challenge and Conquest 

Yoram Aridor was then appointed in his place and enjoined to 
execute an economic policy that would help the Likud in the rapidly 
approaching election campaign. In the second stage, after winning 
the 1981 elections, it was decided to continue this permissive policy. 
We shall discuss the technical aspects of Aridor’s policy in the 
following chapter. Suffice it to say here that his policies led to a 
profound crisis in the summer of 1983, which came to a head simul- 
taneously with the other, the political and security crisis of Begin’s 
second term, following the war in Lebanon. 

Once the votes in the 1981 elections were counted, and the seats 
apportioned to the party lists, interpretations began to emerge, 
including an evaluation of what the election results meant for the 
longer term. One conclusion, perhaps the most interesting in a 
mixed lot, was that the Likud had become the long-term majority 
party. Those who were of this opinion based their conclusion on the 
fact that in absolute terms the Likud had continued to grow at a fast 
rate, whereas its Labour rival, which had apparently grown at an 
even faster rate, was merely recovering the voters it had lost to the 
Democratic Movement for Change in the previous elections. 

However, this conclusion invites both further comment and some 
qualification. After the 1977 elections, commentators, both publi- 
cists and academics, differed as to the source of the votes that had 
been attracted to the DMC, which had only come into existence a 
year before. It received 200,000 votes, nearly 12 per cent of the valid 
ballots, and it was represented by fifteen Knesset members. Some 
claimed that most of the DMC voters came from Labour’s pool of 
voters, and thus Labour was the party most damaged by the new 
party. Other analysts, such as Naham Urieli and Amnon Barzilai, in 
their book The Rise and Fall of the DMCf believed that if the DMC 
had not existed, disappointed Labour voters would have voted for 
the Likud. Thus both the major parties were harmed by the DMC, 
although Urieli and Barzilai refrain from estimating the relative 
extent of the damage. The results of the 1981 elections, however, 
ought to have put an end to that particular dispute. Apart from 

30.000 voters who voted for the heir of the DMC, a splinter party 
called Shinui (Change), most of the votes which had gone to the 
DMC returned to Labour, the number of whose voters grew from 

430.000 to 708,000 in 1981. A similar picture emerges from a 
comparison of the number of votes given to Labour in 1977 and in 
1973: they fell from 621,000 in 1973 to 430,000 in 1977, the 
difference being about he number of votes received by the DMC. 

Challenge and Conquest 101 

Let us now examine the proposition that the Likud has become 
the party of the future as a result of its continued dynamic growth. 
The statistics provide only partial support for this assumption, as 
indicated by Table 4.1. 

Some commentators, in comparing the figures for 1977 and 1981 , 
did not include Shlomtsion voters, although that party joined the 
Likud after the elections to the ninth Knesset. If that factor is 
neglected, it could be argued that Likud had grown by 23 per cent 
between the eighth and ninth Knesset elections and again between 
the ninth and tenth Knessets. In fact, the growth was only 16 per 
cent when adjusted for Shlomtsion, and if the overall increase in the 
number of voters is also deducted, the percentage increase declines 
from 11.5 to 5 per cent. The picture thus emerging is therefore not 
one of continued rapid growth but rather of a curve which has 
passed its peak. 

If this conclusion is correct, it contradicts another hypothesis 
based on empirical experience as follows: (i) Oriental Jews prefer 
the Likud; (ii) the proportion of Oriental Jews within the electorate 
is rising; (iii) therefore henceforth the proportion of the Likud in the 
electorate must increase. This hypothesis is not, however, 
supported by the results of the elections to the ninth and tenth 
Knessets. There is no proof, that the ethnic factor in the voters’ 
choice between the Likud and Labour will remain stable over the 
long term. Two researchers, Asher Arian and Michal Shamir, 7 
basing their work on opinion polls taken before and after Knesset 

Table 4.1 Distribution of Knesset votes, 1973, 1977, 1981 




Number of Voters (millions) 




Likud Voters (without Sharon's 
Shlomtsion PartyMOOOs) 



Likud Voters (including Shlomtsion) 




% Increase for Likud (without 


% Increase for Likud (including 


% Increase for Likud (including 
Shlomtsion in 1981, butminusthe 
increase attributable to the general 
increase in the number of voters) 



102 Challenge and Conquest 

elections since the 1960s, have shown that one can isolate two 
elements which are statistically correlated with ethnicity, and which 
affect voting in a discernible manner: traditionalism and hawkish- 
ness. It appears that Oriental Jews tend to be more traditional and 
hawkish. This has also been the Likud image in the past and will 
continue to be so in the future. However, it has not been shown that 
traditionalism is a collective characteristic enduring over time; and 
as for hawkishness, it is not yet sufficiently clear how that feature 
will survive the shocks of the war in Lebanon. 

In the following chapter we shall discuss the economic and social 
aspects of the Likud Government, but it should be mentioned here 
that, although Mapai laid the foundations of the welfare state, the 
Likud gave particular prominence to the welfare character of its 
policies. The Labour Party, faithful to its ideological sources, attri- 
buted special value to work and logically demanded a decent reward 
for participation in the process of production. The Likud’s basic 
approach is different: less attention must be paid to an economic 
function such as work, more to the status of the citizen in society, 
such as being old, or a member of a large family or subject to a 
physical handicap, and so on. The contest between these two 
approaches, of which the Likud’s is more fashionable, is still being 
waged, not only in Israel but throughout the West; its outcome 
could be highly influential in determining the future of the Likud as 
a long-term ruling party. 

The Begin Era 

It is said that the Likud-Herut Movement has no history, only the 
biography of its leader, Menachem Begin . Certainly there can be no 
question about his dominance as founder and anchor of stability 
during twenty-nine long years marred by repeated electoral defeats, 
and as final arbiter whose views and management of current policy 
were unchallenged. It is too soon to say whether he was one of the 
political greats, as his admirers believe, or merely a successful 
demagogue as his rivals say. What is clear is that Menachem Begin 
made his mark on the history of Israel and of the region and 
strengthened the morale of a people confused and depressed in the 
aftermath of the Yom Kippur War, but he also exposed them to the 
danger of disaster. 

An outstanding politician has many facets. Two characteristics of 

Challenge and Conquest 103 

Begin’s kind of statesmanship should be emphasised, in that they 
were peculiar to him: his method for raising the country’s morale, 
and his use of the memory of the Holocaust as a source of national 
atonement. In describing these traits, one has to indulge in specu- 
lation as to his motives. Admittedly, it is impossible to enter the 
heart and soul of another man; nevertheless, hypotheses on the 
subject, if they are not clearly contradicted by facts, must be permis- 
sible. Without a modicum of speculation, the study of history in all 
its variety becomes mere chronology. 

We have already said that the Yom Kippur War and its aftermath 
in Israel, in the diaspora, and in the non-Jewish world, left the 
Israeli public confused and sunk in a sea of depression, from which 
the Labour Party and its government, which had long since turned 
into mere administrators with no vision, could not lift it. Menachem 
Begin took power, presumably in the firm belief that Providence 
had charged him with freeing the people from the nightmare of 
failure. In the world of Darwinian ideas in which Begin lives, 
standing upright implies forcing one’s fellow man to bend; one 
pushes around anyone who is standing still and one challenges those 
who are or pretend to be sufficiently big and strong to lay down the 
law to those around them, but whose determination, in fact, is 
weaker than it appears. This was, in fact, the blue-print guiding the 
Prime Minister’s actions even during his first term of office, as 
witness his appointment of Ariel Sharon as the minister in effective 
control of the occupied territories, on the one hand, and his clear 
signalling of the limits of Israel’s willingness to withdraw, on the 

He expressed these views in his talks with President Carter during 
his first visit to Washington in the summer of 1977. Even then one 
could see the first signs of the methods he was about to use in order 
to stiffen Israel’s resolve. For some time diplomatic circumstances 
forced him to delay the process, but after signing the peace treaty 
with President Sadat and getting rid of two troublesome ministers, 
Dayan and Weitzmann, he could once again do as he pleased: 
suppress Arab irridentism in Palestine, not infrequently by 
excessive force; escalate the battle against the PLO and its allies in 
Lebanon; destroy the nuclear reactor in Iraq (incidentally, 
knowledgable people have more than once expressed reservations 
regarding the necessity of that action for Israel’s security); say ‘No’ 
repeatedly to the United States; make public personal attacks on 
prominent foreign statesmen ; and as the piece de resistance , verbally 

104 Challenge and Conquest 

whiplash the US ambassador in a conversation bearing all the 
characteristics of Begin, the demagogue — all these were stations 
along the way. The decision to go to war in Lebanon cannot be fully 
understood if one ignores Begin’s wish to stiffen the nation’s 
backbone by smashing the weak and challenging the strong. 
Perhaps even his arrogant self-praise, the identifying mark of the 
successful Begin, was merely a slight exaggeration for the sake of 
helping along the psychotherapeutic process which he had begun in 
order to shake the country out of its depression. 

In retrospect, one can say that the confusion and depression of 
Yom Kippur no longer plague the country. However, this achieve- 
ment, perhaps a result of Begin’s therapy, and perhaps, at least 
partially, the result of the passage of time, has exacted a rather high 
price, whether in terms of relations between Jews and Arabs, or in 
terms of the animosity of foreign politicians and countries whom the 
Prime Minister engaged in verbal battles or whose interests he 
actually damaged , and , above all , in terms of the damage to national 
unity. Indeed, Menachem Begin divided the country far more than 
any of his predecessors. 

Begin was not the first to be called the King of the Jews. There 
was another whom the people, not a few of them mockingly, called 
the King of the Jews. He too was what one calls these days a social 
demagogue, and of him it was also said that he undermined the 
colonial authority then ruling the country. The man in question, 
Jesus of Nazareth, roamed the country armed with a few simple 
messages, the principal one, or at least the one most readily 
absorbed, being his declaration that, of his own free will and in 
agreement with the Divinity, he had taken original sin upon himself. 
The concept of sin and the sense of guilt are Jewish inventions, and 
so it is only natural that tidings of personal atonement following the 
transfer of sin to the saviour, Jesus, spread rapidly among the Jews 
and that the bearer of this message became increasingly popular. 
Today it would come as no surprise to learn that there was a positive 
correlation between the low intelligence quotients, the poor educa- 
tion , and the poverty of his followers and their degree of belief in his 

Menachem Begin bore a different message, better suited to the 
circumstances, the times, and his purposes. However, what was 
common to him and the other King of the Jews, was that they both 
offered atonement to their followers, not only for the sins of the 
past, but for eternity. Begin did this by means of the Holocaust, 

Challenge and Conquest 105 

which exterminated one out of every three of the sons and daughters 
of the Jewish people, not only wiping mortal men off the face of the 
earth, but also destroying a civilisation and way of life which will 
never be seen again. It should be recalled that Begin, unlike his 
political rivals on the Zionist left, valued and cherished that civili- 
sation and way of life. According to his message, since the terrors of 
the Holocaust have been visited upon the Jewish people, it can sin 
no more. In the great account book on high in which the deeds of 
men and nations are registered, with credit entries balanced by 
debits, there is in the Jewish account no longer any debit column. 
This in brief, was Begin’s quasi-religious message; and since the 
Jewish people, even in its secularity, is a nation of faith, as can be 
seen from its ceaseless preoccupation with morality and justice (for 
which there is no guarantee or sanction other than the divine one), 
Begin’s message found eager listeners, their attention propor- 
tionate to the weight attached to faith, rather than critical intelli- 
gence, in their mental make-up. 

Israel is a nation whose recent past has redeemed it from sin: it 
would be difficult to find a message that speaks more suggestively to 
the depths of the people’s innermost being, and this serves to 
explain the quasi-religious sentiments which Menachem Begin 
aroused in many parts of the community. Did the Prime Minister 
deliberately exploit their feelings and the associations he aroused by 
recalling the Holocaust over and over again, or did he do so uncon- 
sciously, the way politicians do in constantly referring to topics 
which concern them, whether they are relevant or not? This 
question must be answered by social psychologists. Suffice it to 
point out here that Begin proclaimed redemption; there is no better 
explanation of why a politician, whose failures had made him a 
laughing stock in the eyes of Israel’s social and political elite, 
became a leader respected by a much larger number of his fellow 
countrymen than the rather limited nucleus of Herut loyalists. He 
was not an efficient party boss, nor yet a great statesman, and 
certainly not a military leader; even as a demagogue and a prophet 
of frustration and hatred, there have been others more venomous. 
But he preached the message of a certain kind of redemption. The 
fact that he divided the country is not surprising; preachers of 
redemption have always been divisive. 

106 Challenge and Conquest 


1. Zeev Jabotinsky (1880-1940), a Zionist leader, founder of the Revisionist 
Zionist Alliance, the forerunner of Herut. 

2. Yaakov Shavit, From Majority to State (Hebrew) (Yariv-Hadar, Tel Aviv, 

3. The Society for the Land of Israel was established after the Six Day War to 
promote the idea that the land west of the Jordan is the historical patrimony of the 
Jewish people and should be subject to Israeli sovereignty. 

4. Tsvi Raanan, Gush Emunim (Hebrew) (Sifriat Hapoalim, Tel Aviv, 1980). 

5. A heretical movement that swept through world Jewry during the seventeenth 
century, following the appearance of the false messiah Sabbatai Sevi. 

6. Nahman Urieli and Amnon Barzilai, The Rise and Fall of the DMC (Hebrew) 
(Reshafim, Tel Aviv, 1982). 

7. Asher Arian and Michal Shamir, The Ethnic Vote in Israel’s 1981 Elections’ 
Electoral Studies, 1, 1982, pp. 315-31. 



The Jewish settlement (the Yishuv ) in Palestine during the period of 
the Mandate can deservedly be called a state in the making. With 
one exception: it did not concern itself with economic absorption, 
apart from the absorption of agricultural settlers. These were 
acknowledged to be worthy of public support, in that they were 
carrying out a national mission: the settlement of barren and remote 
places in the country, sometimes cut off from the centres of the 
Jewish population. Their status was similar to that of IDF soldiers 
sent on a mission. 

This explains the character of agricultural settlement, which was 
never intended to become fully profitable, in terms either of the 
resources made available to it by the responsible institutions or the 
concepts of the time. The socialist views of the settlers and their 
organisations combined with their lack of independent capital and 
the national imperatives to which land settlement, according to the 
outlook of the leaders of the Zionist movement, was meant to 
respond. Candidates for agricultural settlement were supported by 
the institutions of the Yishuv and of the Zionist movement: they 
were trained abroad, brought to the country, consolidated as a 
group, and sent to settle in places chosen for them, using the 
resources put at their disposal. While the arrival of other kinds of 
immigrants also gladdened the hearts of the Jewish inhabitants of 
Palestine and they too were wanted and lobbied for by the Zionist 
movement, which sought to bring in as many Jews as possible, those 
who came on their own had to support themselves. Upon their 
arrival in the cities or towns, they had to stand in queues at the 
employment bureaus as did the veterans. If they had funds of their 
own, they opened stores, workshops, or factories — all on their own 
initiative and at their own risk. 

This outlook remained in force during the early years of the state 
as well. Agriculture was a planned branch of the economy, and 
those who joined it, whether veteran settlers or new immigrants, 
went through an institutionalised process of absorption. Other new 
members of the labour force, whether they lived in hastily erected 
tent cities, in towns, or in the cities, were expected to find 


108 Transformations 

employment in the cities or in the development projects undertaken 
by the government or the Jewish Agency. It can be said that during 
the first five or six years following the establishment of the state, the 
dual character of the economy was preserved: part of it, largely the 
agricultural sector, was planned, while the remaining sectors were 
governed by market conditions, i.e. business initiative, competi- 
tion, supply and demand, etc. (An exception to this generalisation 
is, of course, the government sector, including the Jewish Agency 
and the municipal bureaucracies, whose share of national income 
grew greatly in comparison with the period of the Mandate. This 
could also be defined as an absorbing sector of the economy, with 
features placing it somewhere between planned agriculture and 
unplanned urban enterprise.) 

Those who implemented the settler-statist national agenda 
guiding the actions of the national leadership at that time, wanted a 
large part, if not the majority, of the new members of the labour 
force to be absorbed in agriculture for their ideology demanded the 
upending of the Jewish economic pyramid. Moreover, the vital 
need to fill the regions left empty by the flight of the Arab 
inhabitants during the War of Independence also cried out for 
agricultural settlements. Finally, agricultural settlement suited the 
self-image of the Zionist movement as one which was meant not 
only to redeem the people from its exile but also to redeem the land 
from its barrenness. One might add here that, while economic 
absorption in agriculture was the most thorough going, it was also 
the most tightly controlled. Given the conditions of the mass immig- 
ration of highly diverse communities, this characteristic had to be 
seen as an important advantage, perhaps a decisive one, in the light 
of the absorption apparatus. Farming and not urban communities 
seemed the preferable melting pot. Nevertheless, the basic facts of 
the economy prevented the 'productivisation' ^ ma j or j t y c f 
immigrants by way of agriculture. During the Mandate an endless 
dispute was waged between the Jewish community and the 
mandatory authorities, who argued against uncontrolled immigra- 
tion, claiming that the absorptive capacity of Palestine was limited, 
given the limited availability of fertile soil, water, etc. The 
economists of the Zionist movement, men such as Robert Nathan, 
Oscar Gass, and Daniel Kramer in their book, Palestine, Problem 
and Promise,' argued against this view, claiming 'The reserves of 
land, water, and other natural resources are not the basic factors 
determining the extent of economic development that can be 

Transformations 109 

achieved in the coming decade'. They did concede that ‘Agriculture 
will receive a less important permanent status in the structure 
of Jewish employment than it enjoyed during the thirties’. What 
these economists foresaw in 1946, when their book was published, 
was what the government actually encountered after the establish- 
ment of the state: the form of productivisation, which the leader- 
ship considered the most satisfactory for masses of immigrants, 
proved to be of limited potential, just as Nathan and his colleagues 
had foreseen. Between 1948 and 1954 the supply of Jewish man- 
power grew by about 300,000. Agriculture absorbed about 20,000 
employees, less than 7 per cent of those who joined the potential 
work force. The main reason for this disappointing performance 
was the relative shortage of resources available to the absorbers: 
the scarce primary physical resource was water — but Jewish 
agriculture was based on irrigation. The Zionist movement’s 
economists estimated that available water resources were some 
2.84 million cubic metres, an estimate which proved unduly opti- 
mistic (in 1983 Israel used approximately 1.7 million cubic metres 
of water, including quantities supplied by the National Water 

As mentioned previously, the principal issue that forced itself 
upon the leaders of the state immediately after its establishment, 
and one upon which they concentrated to the exclusion of all others, 
was the absorption of the masses of immigrants pouring into the 
country. The government was forced to channel resources, which it 
did not actually have, to provide the primary needs of the immig- 
rants and put a roof over their heads, even if only a very 
rudimentary one. Both Zionist ideology and common sense told the 
political and administrative elites that it was insufficient to supply 
what was needed for mere subsistence and nothing more. Agricul- 
ture, the most highly developed and preferred absorptive branch, 
could only support a limited number of immigrants: and its limita- 
tions grew increasingly apparent with the passage of time. By 1954- 
5 the absorptive capacity of agriculture had reached its limits. In the 
meantime the cities and towns had filled with immigrants, who 
made a living of sorts in industry, construction, and the services, 
areas of activity that did not receive planned government funding, 
apart from the civil service and its branches and the make-work 
projects for the unemployed. However, it was evident that these 
branches of the economy could no longer support the burden of 
economic absorption on their own. They could not expand and 

110 Transformations 

develop, at least not according to the rules then applying in Israeli 

Countries which go through a process of mass immigration 
generally solve the problems of absorption by lowering real income: 
the marginal immigrant prepared to work for the minimum 
necessary for his sustenance determines the level of wages. 
According to economic theory, in such situations entrepreneurs are 
found, or ought to be found, who somehow raise the capital 
necessary to transform the immigrants from people dependent upon 
public support to self-supporting workers. Moreover, the low real 
wages go hand in hand with a currency undervalued in terms of 
purchasing power parity, which in turn helps to attract capital to the 
country absorbing the immigrants and to encourage exports from it 
as well. However, Israel took the opposite path. The political elites 
derived support from the labour movement with a strong trade- 
unionist tradition; anyone wishing to absorb immigration against 
that background had to guarantee real wages and attract capital 
even though investment might not have been attractive from a 
business point of view. Thus Israel had to support a chronic import 
surplus needed to provide a decent standard of living for an under- 
productive society, as well as an over-valued currency. The decisive 
achievement of the Mapai regime, without which it is doubtful 
whether it would have been possible almost to double the original 
population within the first three or four years of the state, was the 
importation of foreign capital on an unprecedented scale compared 
with the size of the Israeli economy. Of necessity, this capital was 
not imported on a commercial basis. The mechanisms invented and 
activated by Mapai , from the effective raising of contributions in the 
prosperous Jewish communities abroad to the issuing of interest- 
bearing bonds denominated in dollars and negotiating international 
transfer payments (German reparations and loans from the United 
States), were unique. The Likud Governments, although no less 
thirsty for funds, never displayed talents like those of the first Israeli 
governments or showed the same creativity and practical organisa- 
tional ability in obtaining economic assistance to subsidise 
absorption and development. 

Critics of the economic rules of the game instituted by the Mapai 
regime and of the ‘shnorr’ (Yiddish for begging) as an undignified 
way of providing for the needs of the economy — the more so as 
they encouraged dependence — were correct in pointing out the 
distortions they caused. It is true that those who live on charity 

Transformations 1 1 1 

become accustomed to consuming more than they produce either by 
physical or intellectual work. The result is parasitism and depen- 
dence on those who hand out the money and demand nothing in 
return. However, the Mapai leaders could argue against their critics 
that the process of productivisation which they launched during the 
first years after the establishment of the state, created a healthy and 
functioning society, the very opposite of a consciously and openly 
parasitic way of life. As for dependence on donors, it is doubtful 
whether a country the size of Israel existing in an environment 
noteworthy for its extreme hostility, could have been any freer in its 
decisions had it not received foreign aid. More than anything else, it 
is doubtful whether the veteran settlers would have agreed to the 
mass absorption of immigrants had they known it would necessitate 
a steep and prolonged decline in the standard of living to which they 
had become used (and which was not, in any case, particularly 
high). In retrospect it can be said that the actions taken by the 
political and administrative elites during the first years of the state 
were sensible in terms of that period. 

The key words in the foregoing sentence are 'that period’ . Twenty 
to thirty years later, the economic habits which originated in the 
1950s and perhaps even earlier, diverted public attention from the 
first principle of accounting, which is that the books must balance — 
perhaps not every year, but at least they must average out over the 
years. It became customary to think that if one came to the end of 
one’s tether, the government would rush to the rescue, since the 
government had an unlimited bank account, which Uncle Sam or 
some other provider would replenish whenever necessary. Thus the 
granting of favours to one sort of citizen or another was seen to 
depend only on the good will of legislators or administrators, not on 
objective constraints limiting what could actually be given away. 
This approach was accompanied by a policy of over-valuing the 
Israeli Pound, and afterwards the Sheqel. As a result, exporting 
became more difficult and, conversely, imports were encouraged. 
Thus a pattern of over-consumption was created, without taking 
into account the ultimate results, either in the domestic economy or 
in its effect on the balance of payments. The Likud governments did 
very little to change these patterns, even though the parties of which 
they were composed had been its most vocal critics whilst in oppos- 
ition. In the mid-1960s, a momentous period during which certain 
decisions which shaped an entire generation were taken, the time 
had been ripe for a fundamental change in the country’s economic 

1 1 2 Transformations 

ways, away from the political and economic circumstances created 
during the first decade. An effort could have been made to 
normalise the average Israeli’s attitude towards the basic economic 
categories of ‘have’ and ‘have not’. However, that change was never 
made, and the results are clear for all to see. 

Industrialisation Policy 

By the end of the 1950s it had become abundantly clear that the 
disappointing rate of absorption in agriculture was a permanent 
phenomenon, both because of the high cost of creating an agricul- 
tural production unit, and because of the scarcity of available 
physical resources, especially water. At the same time the govern- 
ment’s efforts to raise capital began to bear fruit: contributions, 
raised in the diaspora, dollar bonds, reparations — all these gave 
the Treasury extensive financial resources. Fortunately it was 
decided not to waste them on current expenditures. There was no 
shortage of potential workers; on the contrary, there was an embar- 
rassing abundance. In what economic sector should they be 
absorbed so as to turn them into productive workers? The question 
carried its own answer; once agriculture was removed from the list 
as the absorber of the masses, only industry was left. Since the 
Second World War it had employed about a quarter of the Jewish 
labour force. The government therefore decided to put their 
development money into industry, and as a sign of the firmness of 
that decision they placed the matter in the hands of one of their own 
people: Pinhas Sapir, a man who had earned a reputation as an 

This decision was not an easy or self-evident one. Industry had 
previously enjoyed encouragement neither from the Jewish Agency 
nor from the State of Israel. Certainly it did not obey the instruc- 
tions of the Party. The prominent industrialists belonged to the 
bourgeois camp, the traditional rival of the Palestine Workers’ 
Party. While there were several industrial firms belonging to the 
Histadrut, organised within the administrative framework of Koor 
(the manufacturing concern), Solel Boneh (the construction 
company) and Hamashbir Hamerkazi (the wholesale organisation), 
it was clear to Sapir and those he represented that anyone devoting 
himself to the task of industrial development must accept the 
additional risk entailed in acting in an unknown and potentially 

Transformations 113 

unfriendly arena. There was a further risk because as soon as the 
decision was made to give government encouragement to indus- 
trialisation, the question arose of where to invest the money 
originating in the government budget. 

In very general terms, this question did not arise in agriculture. 
Or, more precisely, it had arisen and been answered years before: 
according to standard procedures, public monies were invested in 
the establishment of additional mixed agricultural units, based on a 
few acres of irrigated fields whose produce was mainly intended for 
the local market. The co-operative agricultural settlements hardly 
grew any produce for export: their share in citrus production began 
to increase only after the local market for vegetables had been 

What direction, then, should be given to the effort at industriali- 
sation? The government had no ready answer, and there was no one 
in Israel who could advise or direct it. However, there was the 
example provided by the branch in which rich experience in public 
funding had been accumulated: agriculture. The leadership, the 
Minister of Finance, Levi Eshkol, and the recently appointed 
Minister of Trade and Industry, Pinhas Sapir, set out to plan on the 
agricultural model. The course of action was determined by the 
outlines of a given local market, on the one hand, and given 
productive factors on the other. Industry in Palestine had taken 
great strides during the Second World War: the lack of transport 
facilities had provided effective protection against foreign competi- 
tion; the lack of foreign exchange after the establishment of the 
state also acted as a defensive wall protecting local production. Now 
this wall had only to be reinforced by customs duties and home- 
grown administrative procedures to create a well protected local 

Nevertheless the question remained of the direction industriali- 
sation was to take, that is, the steps to be taken after sufficient 
attention had been given to supplying the local market. It should be 
added that during the mid-1950s the local market was unsophisti- 
cated and undemanding, very different from that of the 1980s as far 
as variety and quality were concerned. In other countries which 
have undergone the process of industrialisation, entrepreneurs 
from the private sector set the direction of future growth, even in 
Third World countries like Taiwan, with a similar history of rapid 
industrialisation. However in Israel, where the rules of the game 
were unique, it was difficult for the private sector to guide industrial 

1 1 4 Transformations 

development to the extent necessary to supply permanent 
employment for a rapidly growing population as well as for the 
currently unemployed and underemployed. Previous means of 
absorption had not been sufficient to engage them in the productive 
process, nor did the Mapai economic regime place sufficient trust in 
businessmen, who were the traditional supporters of rival parties, to 
entrust them with considerable economic resources to be invested 
as they saw fit. Here then the reluctance of the donors met the 
incapacity of the potential recipients. This combination of 
circumstances led to industrialisation subsidised and directed by the 
government, and planned according to the example of agriculture: 
in other words supply, not demand, was to provide the potential for 

In schematic fashion one can describe the planning process as 
follows. In a given year so many job-seekers reach the labour 
market, distributed in such and such proportions among the 
different regions of the country. Industry needs electricity, raw 
materials, etc. Of these the government was able to supply a certain 
quantity. The missing factor was someone to organise production , a 
person or a body with some experience and knowledge in the estab- 
lishment and running of firms of a certain size — in economic 
parlance, an entrepreneur. At this stage the search for entrep- 
reneurs became a prime task, and it was placed in the hands of the 
minister for industrialisation, Pinhas Sapir. He provided either all 
or most of the necessary capital, thus making the tame entrepreneur 
properly dependent upon the government. Investment proposals 
were prepared jointly by Sapir and his staff and assessed, among 
other things, according to formulas which set the relationship 
between the capital invested, employment, and profit, and by the 
captive entrepreneur who might or might not have contributed his 
own ideas to the process, but who claimed to be experienced and to 
possess some executive ability. From the point of view of the entrep- 
reneur, the investment entailed no actual risk: the capital was not 
his in any case. He was justified in supposing that whoever had 
supplied him with the money, would also make sure that his 
investment remained profitable. In this way a bond of mutual 
reliance was forged between the government, which supplied the 
food, and those who fed at its table, the class of entrepreneurs. At 
the same time, the real purpose was also served: a large number of 
plants were established in branches of production considered to be 
labour-intensive; in other words, they provided a relatively large 

T ransformations 1 1 5 

amount of employment for every pound invested in equipment, 
buildings, etc. 

As in agricultural development, which was limited by a shortage 
of water, limitations in the above pattern of industrialisation soon 
came to light: limits in the skill and industrial experience of all the 
participants. The entrepreneurs’ industrial experience was most 
often limited to theoretical knowledge or practical training in one of 
the traditional branches of manufacturing, such as food processing, 
building materials, or textiles. The government bureaucracy was a 
further limiting factor. Industrial plant was therefore set up on a 
large scale, providing employment but generally lacking the ability 
to compete internationally, a feature which had not been 
emphasised from the start among the criteria for its establishment. 
However, this sort of industrialisation, as long as it enjoyed 
protection from external competition through customs barriers and 
administrative restrictions (such as import licencing) which were 
difficult to penetrate, and as long as it did not begin to produce 
substantial surpluses which could not be sold locally, satisfied the 
chief requirement of its initiators: employment for all. The five 
years between 1955 and 1960 represented the height of Pinhas 
Sapir’s career: he industrialised the country; in other words, he 
created jobs and sources of livelihood in industry. In so doing he 
resembled his colleague, Levi Eshkol, who in the first five years of 
the state had filled the empty expanses of the country with hundreds 
of Jewish settlements, into which tens of thousands of families were 
absorbed. It is no exaggeration to say that these two men deter- 
mined the general outlines of the productive map of Israel during 
the first decade of its existence.’ 

The availability of extensive financial resources deriving from 
unilateral transfers from abroad, raised on the initiative of the heads 
of the Israeli Government, served, as if by the way to point up the 
real bottleneck in the industrialisation process: the evident scarcity 
of entrepreneurs and administrative staff, without whom industry 
cannot operate. We have already described how the man in charge 
of industrialisation, Pinhas Sapir, mobilised entrepreneurs, both 
real and apparent, from every available source, placing enormous 
sums, in the terms of those times, at their disposal, and in effect 
freeing them from worry about economic survival, if only they built 
industrial plants all over the country and employed job-seekers 
productively. Even at that time a question arose, not in regard to the 
need to find entrepreneurs as quickly as possible and staff to assist 

1 1 6 Transformations 

them, but in regard to the ownership of the resources placed at their 
disposal. It was widely held that the government ought to establish 
industrial plants and retain ownership over them. The entrep- 
reneurs netted by Pinhas Sapir brought no capital of their own. In 
most cases the government might have been able to hire their 
services for a moderate fee and retain in its own hands the 
ownership of the assets. A solution of this kind was actually tried: 
public resources were distributed liberally to the economic enter- 
prises owned by the Histadrut. At that time very few people distin- 
guished between the Histadrut and the state, and there were quite a 
few enterprises owned by the Histadrut that were prepared to 
absorb more investment capital, so long as it did not fall into the 
hands of entrepreneurs in the private sector. 

David Kokhav, formerly the director of the research department 
of Bank Israel, established in 1954, and later the senior assistant of 
Finance Minister Levi Eshkol, has stated 2 that a decision on this 
matter was taken in conversations between Eshkol and Sapir 
although it was not preceded by a formal debate which was officially 
recorded. They agreed that Israeli industry should not be controlled 
by the government bureaucracy as the legal owners, but that private 
entrepreneurs should establish manufacturing facilities with 
government support and manage them on their own responsibility 
and for their own benefit. It is possible to imagine what the reasons 
were for that decision, although they may have come as a surprise to 
those who took the socialist image of the ruling party seriously. The 
two men, particularly Sapir, were aware of the drawbacks of 
management, even of economic control, placed in the hands of 
officials; it is likely that they feared that administrative nationali- 
sation through official ownership of the capital invested would have 
deterred contributors from the capitalist West. It is also possible 
that they believed that men who were willing to act as entrepreneurs 
in their own right would not offer their services without the 
tempting prospect of fat capital gains. However, to this day it is still 
surprising that Mapai’s left-wing partners in the ruling coalition 
never raised their voices in protest against the system of producing 
capitalists with government funds. Since 1955, when the regime 
based on co-operation between Mapai and the General Zionists fell 
apart, the government depended on co-operation between Mapai, 
Ahdut Haavoda, and Mapam, with the General Zionists moving 
over into opposition. There is some irony in the fact that the 
material foundations of Israel’s present entrepreneurial economy 

Transformations 117 

were laid by a regime borne on the shoulders of the Labour 
Movement, one in which it enjoyed a decisive majority. 

In three areas of industrialisation the government did not limit 
itself to planning and the supply of capital , but insisted on control — 
in electricity generation and the exploitation of natural resources, 
two areas in which an unusual step was taken, not apparently in 
keeping with the general logic of the policy of industrialisation, 
namely to nationalise enterprises previously privately owned — and 
in the area of defence production. From an organisational point of 
view, the production of electricity and the industrial processing of 
natural resources were no different from other industrial produc- 
tion, in other words, they were carried out by commercial corpora- 
tions. Defence production, on the other hand, was mostly concen- 
trated within the defence establishment, i.e. it figured in the budget 
of the government sector of the economy. Moreover, when one 
looks at the character of the entrepreneur in these areas of 
production — an important point since the entrepreneur was the 
bottleneck in Israel’s industrialisation — one finds substantial 
differences among these three branches. 

The exploitation and processing of natural resources is similar, 
from the point of view of entrepreneurship and development, to the 
other industries established or expanded beyond recognition under 
Sapir: the basis was an existing supply of raw materials, such as 
potash and phosphates (and later copper), an abundant labour 
supply, including engineers and technicians, and a market of known 
size for a standard product, although a large portion of the market 
was foreign. The entrepreneurial model taken from agriculture was, 
therefore, also applicable to the industries based on local natural 
resources: it was supply-oriented entrepreneurship. The methods of 
processing producing added value were standard and to a large 
extent have remained so to this day; the change which took place in 
the scale of production over the years was largely dictated by the 
quantity of raw materials passing through the processing 
machinery. This statement should be somewhat modified, for in 
phosphate production an attempt was later made to upgrade the 
product after assessing the character of demand and anticipating 
changes in it, especially in foreign markets. Thus an attempt was 
made to go beyond the production of a standard fertiliser and to 
manufacture more complex and sophisticated products enjoying a 
competitive advantage in foreign markets. Thus a different model 
of industrial development emerged, one which was essentially 

118 Transformations 

In electricity generation, the basic data determining planning 
have always been the estimated demand for energy within the 
economy in coming years, which requires sophisticated and 
complex calculations, particularly in view of the long lead-time in 
the power generation industry. However, since the electricity 
company operated as a monopoly, the process of electrification did 
not provide a model for demand-oriented entrepreneurship with 
wider application. 

The defence industry also was, in its first version, subject to the 
rules of demand-oriented enterprise. However, to a greater degree 
even than electricity, it was required to meet a concentrated and 
given demand: the IDF decided, within the framework of budgetary 
constraints, what and how much it would buy from the defence 
industry, which was subject to the same authority as the armed 
forces. In any case, the defence industry should not be discussed in 
entrepreneurial terms, although within the government bureau- 
cracy various possibilities were considered and decisions made on 
entrepreneurial criteria, such as cost levels and so on. In fact, within 
the defence industry, which was mainly included within the 
budgetary framework but to some extent organised in separate 
corporations such as Tadiran, technical and economic con- 
siderations forced management to plan production lines for long 
runs or to turn out special products, some of which were meant for 
marketing abroad. In fact, marketing became decisive with regard 
to certain defence industry plants, and in the course of the time 
many became demand-oriented enterprises. 

Two broad categories of industrialisation can thus be seen to 
emerge, distinguished by the driving force behind them. One type is 
driven by the availability of existing productive factors: a labour 
force in any case (for the main motivation for industrialisation in 
Israel was connected with the need to supply productive 
employment for a rapidly growing population), natural resources, 
and entrepreneurship arising from experience in traditional 
branches of production. In this category of industrialisation, which 
was typical of Sapir’s period as Minister of Commerce and Industry, 
the market is regarded as given, and the entrepreneur is called 
upon, broadly speaking, to concentrate his efforts on organising 
production. This model of industrial development was quite similar 
to the standard model in agriculture, and to a certain degree simply 
required its transplantation, with some changes necessitated by the 

Transformations 1 1 9 

character of the product, from the one field to the other. It should 
be emphasised that to the degree that industrial facilities created on 
the supply-oriented model were intended to export anything, the 
planners only envisaged the export of surpluses: the basic price was 
set on the assumption of a protected local market — or an export 
market controlled by international cartels — and the potential size 
of this market was viewed as given, not as a specific problem whose 
solution would influence the profitability of production. At this 
time the second kind of industrialisation was beyond the scope of 
the government planners. 

Entrepreneurship in productive plants in the second category 
does not begin with an inventory of available productive factors 
under the entrepreneur’s control. It starts at the other end of the 
process, where there is a finished product which must be marketed. 
One might go even further and say that this kind of entrep- 
reneurship begins with an abstract market survey, one which seeks 
to find out what is lacking; and only after a shortage is located in the 
market — either a natural one or one that can be created, by adver- 
tising, for example — does the entrepreneur reach the stage at 
which the other industrial process begins, i.e. the location and 
organisation of productive factors in order to satisfy the demand. 

In reality, of course, the division between these two forms of 
industrial entrepreneurship, supply-oriented versus demand- 
oriented, is never as sharp as this. However, the distinction is both 
theoretically valid and of practical significance, especially in the 
Israeli economy which is not blessed with an abundance of natural 
resources. To limit industrialisation to plants based on the supply- 
oriented model would have eventually halted the process of indus- 
trialisation, just as agricultural development was halted for the 
same reasons: local resources, aside from manpower, were strictly 
limited in quantity. On the other hand, industries constructed on 
the demand-oriented model have a productive potential with only 
two restrictions: entrepreneurial talent and manpower. Since in 
Israel at that time manpower was abundant, the demand-oriented 
model clearly ought to have been preferred by the initiators of the 

Assessment of the Sapir Era 

This was not, in fact, the course chosen. Why not? In order to 

120 Transformations 

answer that question one must speculate as to the limited under- 
standing of the man in charge of industrialisation policy, Pinhas 
Sapir, his absolute faith in his own conception of the task entrusted 
to him and the means of accomplishing it, as well as his inability to 
see the short life expectancy of most of the plants built on the basis 
of supply-oriented entrepreneurship . One is still left wondering why 
Sapir preferred industrialisation according to the criteria of supply- 
oriented entrepreneurship, when before his very eyes there were 
two practical examples of industrialisation on the alternative model 
based on demand — and both highly successful. 

One example was the diamond industry. It began with the immig- 
ration of a handful of diamond polishers from the Netherlands just 
before the outbreak of the Second World War. However, workers 
alone do not make an industry. In order to get ahead and succeed, 
capital is needed, but, above all, a market is needed for the product. 
These two factors respond best to what we have defined as demand- 
oriented enterprise. In the middle 1950s, when Sapir was put in 
charge of industrial development, the diamond industry had already 
expanded beyond the few hundred diamond polishers who had 
reached Palestine on the eve of the war and by that time it was an 
industry based entirely on foreign markets. The employment and 
the return it offered for every dollar invested were no smaller than 
in other industries, and if Sapir had been more imaginative and a bit 
less set in his thinking, he would have taken the diamond industry as 
a model for his industrialisation, instead of plywood and textiles. 

The second example is even more striking, because it is more 
general — Jewish industry in Palestine between 1939 and 1945. 
These were years of feverish expansion; the added value of industry 
(the net industrial product) rose from I£4,020 to I£29,800. 
Corrected for inflation which had virtually trebled in the six years, 
the net industrial product rose from I£4 million to nearly I£10 
million, or by nearly 150 per cent. At the same time the number of 
workers employed in industry rose from 40,000 to 45,000. 3 

These figures are highly instructive in that, first, the development 
they describe was achieved with minimal assistance from either the 
mandatory government or Zionist institutions and second, they 
provide a perfect example of demand-oriented industrialisation. 
The years from 1939 to 1945 were war years, and the industrial 
development was the product of special circumstances which 
created a sellers’ market because of the scarcity of transport and a 
vigorous institutional demand for supplies for the troops stationed 

Transformations 121 

in the region. But viewed from the perspective of the forty inter- 
vening years, Jewish industry then appears to have demonstrated 
marvellous alertness and adaptiveness. It turned itself into the 
major industrial supplier for the regional war effort, and did so with 
equipment that was not particularly modern or sophisticated, and 
exploiting manpower of relatively poor quality because of the 
widespread conscription of men and women into the British army 
and the Palmach, an arm of the Jewish defence organisation, the 
Haganah. This was a sterling example of demand-oriented entrep- 
reneurship in a situation calling for the rapid expansion of industrial 
capacity — all of which was done, as we noted, without planned 
assistance from the government. Admittedly , the increase in 
production, unequalled even during the years of Israel’s most rapid 
industrial expansion, took place under cost-plus conditions and in 
the absence of effective competition. But even if we take account of 
the special circumstances of a congenial sellers’ market, the 
example proves the power of demand-oriented industrialisation, 
provided that entrepreneurial potential exists, as it apparently did 
in the Yishuv. However, once the special challenge of the war 
passed, this entrepreneurial potential went underground; and when 
Sapir and the bureaucratic planners of the State of Israel took up 
industrial development on the formula of the Jewish Agency 
Settlement Department, they burrowed even deeper, as if they had 
gone into extended hibernation. 

This is the place for a remark which cannot be supported statisti- 
cally, but which fits in with what has since occurred and with what is 
known about the talents, possibly hereditary, of the Jewish people. 
The demand-oriented entrepreneur is first and foremost a trader, in 
the sense that he is endowed with an ability to sniff out a shortage, in 
other words, a market. The organisation of supply is secondary in 
the scheme of bringing together the need to buy with the ability to 
supply. This is especially true when the demand is not localised, in 
other words, not limited to a narrow geographical area. Commerce 
and, similarly, demand-oriented enterprise works well in an inter- 
national marketplace where, even if there are barriers, they are 
penetrable. This condition, the ability to discover demand, like the 
other, that it had to be found in the tenders of the civil and military 
authorities responsible for large parts of Asia and Africa, existed 
during the Second World War; the Jewish industrialist-entrep- 
reneur moved in a field of activity extending throughout the Middle 
East. The Biblical story of Joseph in Egypt illustrates this situation. 

122 T ransformations 

The key lay in deciphering Pharaoh’s dream and discovering future 
demand — international demand, incidentally; the actual storing up 
of the grain for long-term marketing could safely be left in the hands 
of the pharaonic bureaucracy. 

The question remains, why was no lesson learned from these two 
examples? In a monograph written during the 1960s by Moshe 
Mandelbaum, then an official in the Ministry of Commerce and 
Industry and later the Governor of the Bank of Israel, Ian Mikardo, 
a British MP and an industrial expert, is quoted as complaining that 
the Israeli industrialist (in the middle 1950s) was essentially a 
merchant, and as such he believed he knew everything, whereas the 
industrialist must be aware of his lack of knowledge, on the one 
hand, and of the need to consult with other people, on the other. 
Mikardo was talking to civil servants who, true to type, tended to 
think they knew best what systems to adopt and what goals to 
pursue in establishing or expanding industry, which explains the 
basic flaws built into industry during the Sapir period. Decades were 
to pass before Israeli industry eliminated these flaws and became a 
productive sector in which the typical manufacturing firm — as 
opposed to the white elephants of heavy industry, metals, and 
chemicals — was the product of demand-oriented entrepreneur- 

The Importance of Exports 

Unless definite policies are adopted to change the relative 
structure of the economy’s production in terms of import substi- 
tutes and exports, the economy will . . . be in danger of failing to 
exploit its growing GNP [the most comprehensive index of the 
economy’s productivity] for the purpose of increasing its degree 
of economic independence. 4 

In that somewhat complex sentence, Professor Dan Patinkin of the 
Hebrew University, the teacher and spiritual mentor of most of the 
senior economists in the public service, summarises the lessons of 
his book, The Israeli Economy, The First Decade published in 1967. 4 
The sentence contains a prophetic element, which remains true to 
this day. Only the dimensions of the problem have changed; in 
essence it remains just as it was when Patinkin completed his manus- 
cript. The first great economic crisis demonstrated the truth of his 

T ransformations 1 23 

conclusion, and, incidentally, clarified the questionable nature of 
industrialisation in the Sapir mode for people who understood such 

However, something needs to be added to Professor Patinkin’s 
summary. Economic viability depended on the ability to produce 
more import substitutes and goods destined for foreign markets, 
and so did employment and economic activity in general. As 
became clear in the mid-1960s, and as is being confirmed once again 
at the time of writing, without an increase in exports there was no 
way then, nor is there today, of maintaining, let alone expanding, 
either economic activity or employment. 

Around the beginning of the 1960s unemployment ceased to be a 
serious economic problem . The daily average of unemployment was 
about 4,000, as against 850,000 employed workers, i.e. less than five 
per cent. Considering the composition of the adult population, and 
the relatively high rates of chronic illness and illiteracy which 
characterised it, this was a negligible percentage. The relationship 
between employed and unemployed embodied the basic problem of 
the Israeli economy: employment and its expansion — for at that 
time the working population was growing at a rate of between three 
and five per cent annually — depended on one of two factors, 
increased import of capital, i.e. loans or unilateral transfers from 
abroad, and increased exports. The devaluation carried out by the 
government in 1962 after sharp internal discussions — Pinhas Sapir 
was one of its strongest opponents, although he did not deny the 
need to encourage exports, but objected to attaining that end by 
means of a devaluation — is evidence of the growing awareness of 
the marketability of Israeli products as a necessary condition for 
achieving the threefold aim of productivisation, full employment, 
and a rising standard of living. 

Two facts illustrate the extent of the problem: in 1960 total 
exports of goods and services came to 14 per cent of GNP; by 1962 it 
reached 21 per cent. The more exports grew, the greater their 
importance as a source of employment. The maintenance of growth 
therefore necessitated increased exports to pay for the imports on 
which the expansion of the domestic market depended; borrowing 
abroad (in the absence of sufficient exports) was not sufficiently 
controllable to sustain economic policy. The pound was devalued 
with the aim of encouraging exports. But this step, though consi- 
dered a radical one at the time, was not very effective; the 
proportion of exports in GNP stuck at around 21-22 per cent. 

124 Transformations 

An attempt has been made to explain the static proportion of 
exports by what have been defined above as the Israeli rules of the 
game. Any rise in the cost of living causes a parallel increase in the 
costs of production because of the cost of living allowances; and 
increased production costs cancel the improvement in the ability to 
compete in foreign markets brought about by the devaluation. This 
explanation is correct, especially since Israel had been indus- 
trialised — and the majority of exports were industrial as early as 
the beginning of the 1960s — according to the supply-oriented 
model. In other words, a significant proportion of its exports 
(excluding diamonds) consisted essentially of the export of wages, 
and consequently their competitiveness was disproportionately 
affected by wage increases. Because of this characteristic of the 
economy, the planners were confronted with a problem similar to 
the one that plagued those in charge of economic policy in Britain. 
Any increase in economic activity brought about an increase in 
domestic costs; exports decreased while imports grew; hence the 
need arose to reduce costs either by reducing employment or by 
devaluation; and so on and so on. This is the notorious stop-go 
cycle, and anyone trapped in it is condemned to keep running on the 
same spot, with yo-yo-like swings between booms and slumps. In 

1965 Israel reached a point in its economic development where it 
was in real danger of being trapped in a stop-go circle. Exports, 
although they had been growing steadily for some time, were fated 
to slow down, owing to the increase in relative money wages. Had 
industrialisation followed a demand-oriented pattern, i.e. one less 
affected by relative levels of wages, exports could have gone on 
increasing notwithstanding rising wages. 

Since the potential for industrial exports, other than diamonds, 
was subject to the limitations inherent in the supply-oriented 
model, the government sought to encourage them by subsidising 
production. This gave rise to a constantly growing burden on the 
government budget. Exports of the textile and garment industry in 

1966 may serve as an example of the type of situation liable to 
emerge from a combination of supply-oriented industrialisation and 
encouragement of exports through subsidisation. The added value 
(i.e. the export value less the costs of imported inputs) was $25 
million that year, or I£75 million according to the rate of exchange 
at the time; but the proportion of subsidies in that sector was around 
I£20 million, almost a third. This excessive rate of subsidisation 
showed that the policy of industrialisation then being implemented 

Transformations 125 

was heading for a dead end. 

Official accounts of the major decline in economic activity which 
took place in 1966 attribute it to the government’s decision to slow 
the pace of public housing construction, because of the slowdown in 
immigration. Since the construction industry, including its 
suppliers, was a major force in the economy, this had a considerable 
depressive effect on other industries. This official description, 
presented in Sapir’s budget speech, in which he set out the 
arguments in support of the steps the government was about to take , 
and replicated in the Bank of Israel’s Report of 1966 analysing the 
trends of the government’s economic policy and its potential results, 
was correct, but only as far as it went. The cause of the slowdown 
was the failure of an economy which operated mainly on the supply- 
oriented model of industrialisation, and its inability to locate 
foreign demand sufficient to provide employment for those who 
were left without work because of a lag in immigration. Thus, 
according to the official description, what came to light was the 
economy’s inability to react to shifts in demand, although the range 
of fluctuation did not exceed 1.5-2 per cent of GNP. A comparison 
of this inability with the flexibility and energy with which the 
economy, though equipped with a much poorer and more primitive 
productive apparatus, responded to the challenge of industriali- 
sation during the Second World War only serves to emphasise the 
systemic weakness built into the economy during Sapir’s period of 
office. During the state’s first decade industry did create 
employment — but employment that was unstable from the start. 

The dilemma which then emerged dogged the Israeli economy 
from the first steps in industrialisation. If the authorities were to 
reduce wages this would deepen the recession by weakening 
demand in the local market (quite apart from arousing the oppos- 
ition of the workers, about which the government was particularly 
sensitive at the time). But industry based on the export of wages 
could not expand production for foreign markets, except by tying 
wages to productivity, and this, because of the nature of the labour 
force, was not particularly high in international terms. 

This is an appropriate place to compare the reactions of the 
Mapai government to the economic realities in 1966, with those of 
the Likud Government under Finance Minister Yoram Aridor. 
Despite the criticisms levelled against them at the time and since, 
Sapir and his colleagues understood what financial responsibility, 
including international financial responsibility, meant. When 

126 Transformations 

demand slackened and costs continued to rise, the Eshkol 
Government — unique in Israel’s history in being headed by a man 
with an economic background — reacted by deflating the economy, 
with the aim of breaking the thrust of rising costs. The action was 
justified by unwillingness to increase the trade deficit, the inevitable 
outcome of a government policy aimed at taking up the slack in 
domestic demand. This policy was the direct opposite of the steps 
taken by Yoram Aridor after the 1981 elections. In a rather similar 
situation, he inflated domestic demand by increasing the budget 
deficit, financed mostly by short-term loans from the international 
financial community. The results: in 1966 Pinhas Sapir achieved a 15 
per cent decrease in the trade deficit, from $535 million to $452 
million, in return for the additional unemployment of 40,000 
workers; Yoram Aridor maintained full employment, but the trade 
deficit shot up from $1.4 billion in 1981 to $2.1 billion in 1982, an 
increase of about 50 per cent. 

The blows that fell on the economy in the early 1960s — the 
devaluation of 1962, the beginning of the slowdown in 1965, and the 
recession of 1966 — indicate increasingly serious disruptions in the 
economic system which had evolved since the establishment of the 
state. The emergence of serious problems in the economy coincided 
with the process of political disintegration to which the ruling party 
and its leadership were subject. Whether there was a connection 
between the two processes, apart from their simultaneity, and what 
the nature of that connection might have been, if there was one, is a 
question for which we have no final answer. It seems probable that 
sooner or later the faulty functioning of the economy ought to have 
led people to draw conclusions regarding the political system. 
However, there was no sooner or later here; the two processes 
occurred simultaneously. The economic and political systems, 
guided by members of the same party (and in many cases the same 
men), ceased functioning efficiently at the same time. And to the 
extent that the Six Day War, which broke out in June 1967, could be 
said to have rescued the Mapai government and its representatives 
from the results of a process of disorientation and collapse to which 
they had long been subject, the same thing can be said about the 
economic leadership. 

Transformations 127 

After the Six Day War 

In the aftermath of the war and victory, the climate changed and so 
did the conditions which had applied during the recession and 
before it. There was also a change in the approach to the subject of 
industrialisation, among other things because Pinhas Sapir relin- 
quished for a certain time the day-to-day management of economic 
policy. The government withdrew from industrial entrepreneur- 
ship. On the other hand, in a manner recalling the events of the 
Second World War, the government became an important source of 
demand. Thus, for example, in 1966 the defence establishment 
spent 64 million sheqels (in constant 1964 prices) on goods and 
services (including wages) in the local market: between 1967 and 
1973 it spent a total of 1.6 billion sheqels, or 229 million annually, 
three and a half times what it had spent before the war. The defence 
establishment created a local market, mostly for technologically 
advanced products, thus creating an atmosphere favourable to 
demand-oriented entrepreneurship. Firms supplying the military 
became the example imitated by other industrial entrepreneurs. 
Others began to view the local civilian market as both limited and 
unstable; they therefore deliberately oriented their businesses 
towards potential markets either wholly or partially abroad. Thus 
many entrepreneurs increasingly abandoned the supply-oriented 
model of industry for a demand-oriented alternative. Today it 
would be difficult to find an industrial entrepreneur worth his salt 
who did not base his planning on the identification of a market, 
either domestic or foreign, and an estimate of its size. The rest 
depends on what the entrepreneur finds. One result of the change 
described here is that today we hear much less than in the past of 
wages as the cost factor interfering with exports. Instead, critical 
attention is given by the entrepreneur to other costs, such as interest 
rates — an entrepreneurial cost par excellence . 


One upshot of the change in the national agenda following the Six 
Day War was the deproductivisation of Israel. The term ‘deproduc- 
tivisation’ is not very precise. In public usage it is meant to describe 
what happens when workers leave agriculture, manufacturing, or 
construction for employment in the service sector; used in this 

128 Transformations 

fashion, the term implies a value judgment, suggesting, among 
other things, that the overall efficiency of the economy is 
diminished when it loses a construction worker and gains a lecturer 
in electrical engineering. The analytical value of the term is 
therefore somewhat doubtful. Nevertheless, changes did take place 
for which the term may be deemed appropriate. First the effect in 
terms of ideology must be described. 

One of the main tasks faced by the national leadership during 
Israel’s first decade was to make the rapidly growing population 
productive. This was connected in the minds of the leaders with the 
Zionist goal of inverting the employment pyramid of the Jewish 
people in the diaspora and placing it on its base. The people’s 
redemption for exile was meant to proceed hand in hand with its 
redemption from its earlier way of life, including redemption from 
insubstantial occupations such as trading, begging and the like. It is 
a mistake to think that utilitarian considerations alone guided the 
national leadership in their obsessive emphasis on the moral value 
of labour. Retrospectively it can be seen that in many cases jobs 
were created which should not have been, and that it would have 
been better to post the worker a cheque signed by the state 
comptroller. The same applies to the owners of the firms in which 
the worker was employed. The reason that such a procedure was 
inconceivable, except in economic theory, is to be found in the view 
of the economic leadership, which did not regard economic activity 
as merely a way of producing and distributing goods and services, 
but rather as a means of removing historical distortions that had 
undermined the structure of Jewish society and the character of the 
individual Jew. 

In the aftermath of the Six Day War, work as a value was 
abandoned along with other values, most of them inherited from the 
period of the Mandate, which had moulded the cultural profile of 
Israeli society from 1948 onwards. Ministers no longer spoke of 
work as an independent value, nor did cultural leaders, and even 
popular songs no longer dealt with it. The change became fully 
apparent in the late 1970s, with the discovery of poverty by the 
Israeli people and their elected and administrative bodies and its 
promotion to the status of a social problem of the first order. During 
the first decade and a half, perhaps the first two decades, of the 
state, as we saw in Chapter 2, the recognised social dichotomy, the 
axis around which the struggle for the distribution of national 
income revolved, was the traditional socialist division between boss 


Transformations 129 

and worker, or, in more neutral terms, employer and employee. 
Then, strongly influenced by the model imported from the United 
States, Israel also adopted the fashionable social division between 
the rich and the poor, rather than between employers and 
employees. According to the new model, a rich person is someone 
who enjoys the products of the affluent society to a satisfactory 
degree or in excess. A poor person is someone whose share is set at 
a minimum called the poverty line or even falls short of it. The 
terminology as well as the reality embodied in this second 
dichotomy is much murkier than the previous one. But since, 
according to the new fashion, class struggle was seen to be an 
antiquated concept, and since the proponents of the new 
terminology could point to the absurdity of placing a salaried bank 
manager on one side of the social barrier and a carpenter employing 
three workers on the other, it was an easy matter for many people to 
replace the old pattern of social struggle by the new, fashionable 
one. Among those who exchanged the old for the new were, rather 
surprisingly, the General Secretaries of the Histadrut, like Yitzhak 
Ben-Aharon and, afterwards, Yeruhaom Meshel, who began to 
discuss poverty and take up positions in favour of the poor. 

The new ideas were bound up not only with the use of 
terminology invented by American sociologists, but also with the 
adoption of a different value system. A worker who does not earn a 
decent living is a victim of exploitation , the mechanism of which was 
thoroughly explained by Karl Marx and his disciples. To do battle 
against exploitation, workers were called upon to organise in unions 
and parties, their demands for an improved standard of living being 
based on the proposition that their labour was worth more than the 
employers paid for it. In other words, it was claimed that an 
exchange of work in return for a wage had been deliberately 
distorted by those wielding sufficient socio-political power to do so. 
The contrast between rich and poor is something quite different. 
The rich person — ‘the bad guy’ in the new scheme — might actually 
be receiving his due share of the national income according to 
criteria of productivity or entrepreneurship, in other words, the 
standard economic criteria. The poor person, on the other hand, 
might be poor because he lacks education, because of illness, 
chronic drunkenness, or drug addiction, or simply because he 
prefers idleness to work; in other words, his poverty might be 
economically justified. However, it is sufficient for a person to be 
rich for society to be justified in taking away a portion of his wealth. 

130 Transformations 

Correspondingly, it is sufficient for a person to be poor for him to 
claim public assistance financed by tax monies collected from those 
defined as rich, according to standards set by the proponents of the 
new social fashion and under pressure from them. 

As has been mentioned, during the first years of the state 
practical arguments in favour of productivisation were stressed: the 
productive industries, whose development and advancement were 
acknowledged to be a necessary condition for the existence of a self- 
sustaining state, needed workers. The large number of potential 
labourers, on the one hand, and the productive processes dictated 
by the plentiful labour supply, on the other, complemented each 
other harmoniously. However, during the early 1960s a certain 
surplus in labour supply began to be felt: in the recession of 1966 
that surplus manifested itself in circumstances that aroused 
concern. After the 1967 victory the surplus disappeared, and a 
shortage of labour began to make its appearance: it was supplied by 
drawing from the population reserves of the occupied territories. 
However, the shortage was transient, concentrated in a few sectors 
(construction and various types of services) and, to an extent, 
artificial because of the feverish increase in demand for labour in the 
defence system. It soon became clear to anyone who cared to look 
beneath the surface, that what were known as the productive sectors 
of the economy had absorbed few workers, or at any rate did not 
absorb them in sufficient numbers to supply employment for every 
potential job-seeker. Thus in 1970, out of close on 950,000 civilian 
employees, 430,000 worked in agriculture, mineral extraction, 
industry (including electricity and water), or construction, i.e. 
approximately 45 per cent. In 1982 the civilian labour force 
numbered about 1 .3 million , of whom 530,000 were employed in the 
aforementioned areas, i.e. 41 per cent. In other words, in twelve 
years only 100,000 workers were absorbed in the primary and 
secondary sectors of the economy, out of the 350,000 added in all 
areas of the civilian economy. This phenomenon is attributable to 
several causes operating simultaneously: for the purpose of the 
present discussion it is sufficient to note that new technology, 
especially in agriculture and manufacturing, and also in 
construction to some extent, led to a relative reduction in demand 
for labour in those areas. And since the entire economy was being 
reorganised on the pattern of demand-oriented enterprise, there 
was no official interest or pressure to employ workers in the primary 
and secondary sectors anyway. 

T ransformations 1 3 1 

In 1971 there were one million people in the civilian work force. 
Ten years later, in 1981, their number reached 1.28 million. Table 
5.1 illustrates the process of deproductivisation: the fastest growth 
during the decade between 1971 and 1981 occurred in the financial 
services: the number employed doubled in absolute terms, and the 
branch rose from the second-to-last to the fifth place. The other 
branch in which the total number of workers increased rapidly was 
the public services, whose share of employment grew from approx- 
imately 24 per cent to nearly 30 per cent. In contrast, the percentage 
share of industry fell, although in absolute terms it absorbed close 
on 60,000 new workers; in agriculture and construction the decline 
was absolute as well as relative. It would be no exaggeration to say 
that the decade between 1971 and 1981 was a decade of bankers, 
stock-brokers, and bureaucrats in public service. Two further 
comments are in order: (i) the change began under Labour and 
continued at an accelerated pace under the Likud, and (ii) this turn 
of events was out of keeping, to put it mildly, with the vision of the 
fathers of Zionism, who had wished to reverse the Jewish 
employment pyramid. Perhaps a third comment might be ventured: 
of all branches of commerce, trading in financial paper is the most 
insubstantial and best deserving the derisory Yiddish appellation of 
luftgesheftn ‘air business’. But this was precisely the branch of 
commerce which did especially well during the decade under 

Some commentators have suggested that what occurred in the 
Israeli economy at that time was part of the process of normalisa- 
tion: the present employment structure of Israel is similar to that in 
other developed industrial countries, including the United States; 

Table 5.1 Employment in Various Branches of the Economy 

















Electricity and Water 










Commerce, Hotels 















Public Services 





Personal Services 





1 32 Transformations 

further, this similarity is no coincidence but rather the product of 
economic forces typical of modern economies in the post-industrial 
age. However, whereas the new employment structures in the 
wealthy industrial states were built on a firm foundation in terms of 
variety of supply and a high level of productivity, this was not the 
case in Israel. In fact, when comparing Israel to the industrial 
nations, the similarity in their employment structure ought to 
arouse surprise and concern. 

In conclusion, it may be said that by the beginning of the fourth 
decade of the State of Israel the foundations of a modern economy 
possessing considerable competitive ability were in place. But a 
large bureaucracy, which has kept growing at a fast pace even 
during the rule of a party traditionally opposed to big government, 
hangs round the neck of the economy like a millstone. There is also 
a growing welfare burden. These impediments, in addition to 
Israel’s disproportionately large defence burden, have inevitably 
slowed down the drive toward self-sustaining growth. 

The Likud Upheaval 

One party’s tenure of power for decades necessarily deprives the 
opposition of government experience and their inexperience affects 
the functioning of the new leaders adversely when they assume 
senior ministerial posts. When the Likud took over in 1977 its 
leadership had few people with practical economic experience — 
apart from what could be acquired in the Knesset committees 
dealing with economic matters. Moreover, it also lacked men with 
the sort of expertise, acquired either by study or by managing large 
companies or government corporations, which gives one a broad 
perspective on the national economy. In other words, the men put 
in charge of the economic management of the country were essen- 
tially amateurs, and they have remained so to this day. Although the 
then Minister of Finance, Yoram Aridor, had a better formal 
education than any of his predecessors, the difference between the 
practical experience of the Likud ministers in the economic sphere 
and in the political and military field, is noteworthy. Not only had 
Menachem Begin served as a minister, albeit without portfolio, in 
the Eshkol and Meir Governments of 1967-70, and therefore 
witnessed the decision-making process of government and partici- 
pated in it to a certain extent, but he also strengthened the political 

Transformations 133 

scope of his government by co-opting Moshe Dayan as Minister of 
Foreign Affairs, and its military side by including Generals 
Weitzmann and Sharon. In contrast, the first Begin Government 
did not include a single man with experience of economic 
management at any senior level. The Finance Minister, Simha 
Ehrlich, and the Minister of Commerce and Industry, Yigael 
Horowitz, had experience and professional expertise befitting 
managers of small or middle-sized economic enterprises; moreover, 
they had no public standing as economists. This affected both their 
status within the government and their ability to execute the policies 
they advocated. 

It would have been inconceivable that the Likud, coming to 
power after twenty-nine years in opposition, should abstain from 
innovation in economic policy. It was especially inconceivable that 
Liberal Party activists within the Likud should have held back, for 
they had an economic message of their own: they stood for a market 
economy, liberated from the despotism of governmental bureauc- 
racy. Moreover, the Liberals saw that their partner, Herut, was 
doing as it pleased in matters of foreign and defence policy. The 
impulse to act, and to act in dramatic fashion, grew stronger until 
the Liberal economic ministers could no longer restrain it. This was 
the background to the economic upheaval that took place in 
October 1977. Amateurism and showmanship joined forces in the 
hasty formulation of policy, and even more so in its hasty execution. 
The initiators of the new economic policy did not foresee the 
difficulties to which it would give xise. When he announced the new 
policy, Simha Ehrlich said he had suffered sleepless nights before 
deciding on it; with unexpected foresight, he added, i have taken a 
weighty responsibility upon myself and risked my political future’. 5 
However, it turned out that loss of sleep offers no protection against 
errors deriving from ignorance and inexperience. 

At the end of 1977 the Israeli economy was adrift. The gross 
business product (i.e. the GNP less the value of government 
activities) had grown by only one per cent (all the statistics 
presented here are set in constant prices) as compared with 1976: 
but exports had grown by almost 12 per cent. In such circumstances, 
while the economy contained reserve manpower, mainly the 
underemployed, the government should have made a particular 
effort to promote exports and to eliminate, once and for all, the 
dependence of the producers, particularly the industrial producers, 
on the local market. In fact, the government did two things: it 

134 Transformations 

abolished exchange control without anticipating how the change, 
essentially a technical one, would affect imports and exports; and 
then, starting in 1978, it acted energetically to stimulate local 
demand, thus tempting industry to try its luck in the local market. 
Apparently the government based its decisions on the assumption 
that free movement in foreign exchange would cause a fall in the 
value of the sheqel and thus increase export opportunities. In fact, 
dollars flowed into the Israeli banking systerii, having the opposite 
effect to what was desired. Long months passed before the 
authorities made the necessary adjustment. In any case, the first 
effect of the upheaval was to halt exports and encourage imports. 
Table 5.2 shows some of the results. 

The rate of growth in private consumption almost doubled: the 
growth of exports was halved; and imports, which had declined by 2 
per cent in 1976-7, increased by 9 per cent. Another change also 
took place , which , in later years, was severely to harm the economy: 
inflation accelerated very rapidly, as is shown in Table 5.3. 

Floating the currency, that is, letting supply and demand set the 
rate of exchange in the financial market, was a reasonable step in 
itself, the more so as under the last Labour government a system of 
creeping devaluation had already been adopted. However, the 
timing was faulty: the currency should have been devalued after the 
export industries had achieved independence from the local 
economy, let us say, after two years of intense promotion of 
exports, once they had become a leading factor in economic growth . 
Moreover, the floating of the shequel, even at the time when it was 
done, could have achieved the desired results, if it had been accom- 
panied by monetary and budgetary policies designed to prevent the 
rise in domestic demand. But the necessary restraints were not 
imposed: the Liberals in the Likud missed an opportunity which is 

Table 5.2 Changes in Economic Indicators 1976-8 






Private Consumption 






+ 12 

+ 6 





Table 5.3 Average Annual Inflation Rates (%) 

1968-70 1971-3 1974-7 1978 


1980 1981 


3 15 36 51 


128.7 124.1 


T ransformations 1 35 

unlikely to return soon, if ever, to derive permanent economic 
benefit from the improved competitiveness of certain branches of 
Israeli industry following the 1967 war. 

A question arises here: was it only because of his lack of profes- 
sional knowledge that Simha Ehrlich missed his big opportunity, or 
were there deeper causes, inherent in his economic philosophy, or 
the collective character of the Liberal Party? Later on, we shall see 
Jhat if it was the result of a philosophy or a collective characteristic, 
they were not peculiar to the Liberals. Like them, the Herut party 
was marked by what must be termed economic permissiveness. 
Menachem Begin used to declare that he wanted to do well by the 
people. His first government acted on this precept, and so did his 
second one, but with a vengeance. Of the three finance ministers 
who served under Begin, only one wanted to impose economic 
austerity: Yigael Horowitz, a former member of Mapai. The other 
two, Simha Ehrlich and Yoram Aridor, so different from each other 
in personality, in party origins, and in formal economic training, 
turned out to be finance ministers who swam with the tide and who 
refrained from imposing policies likely to encounter public resis- 

The Bank of Israel Report of 1979 described the economy as 
suffering from excess demand fuelled by government spending, 
even though the government could point to a compensatory 
achievement: GNP grew by 5 per cent. However, imports increased 
from $10.2 billion to $12 billion, and exports only grew from $7 to 
$8.4 billion. The growing gap in the balance of payments apparently 
scared the political leaders: Ehrlich was forced to resign, and Yigael 
Horowitz was appointed in his place. He imitated his predecessor 
once removed, Yehoshua Rabinowitz, and introduced a 
deflationary policy. He cut subsidies, restricted the expansion of the 
money supply, and appealed to the public, in a tearful voice and 
with an expression presaging disaster, calling for restraint, for 
making do with less, and, above all, for saving dollars. It soon 
became clear that he was a foreign element in the Likud and, apart 
from his being a fervent believer in the integrity of the Land of 
Israel, was quite unlike his ministerial colleagues in his policies, and 
even more in his willingness to demand sweat and tears from the 

So, after serving as Minister of Finance for less than a year, he was 
invited by his colleagues to quit, to no small degree because they 
were apprehensive that by telling the truth about the economic 

136 Transformations 

chaos he had inherited from his predecessor, and even more his 
vigorous effort to put the economy in some order, he would cause 
the Likud to lose the elections. After Horowitz’s dismissal, they 
sought a successor after their own hearts and came up with Yoram 
Aridor. In no time he proved to be the find of the year, an election 
year, as it happened. Under his leadership the Israeli people set out 
on an economic bonanza unprecedented in the three decades since 
the establishment of the state: in real terms private consumption 
increased in the election year of 1981 by 10.5 per cent. 

The Likud again won a plurality of seats, and there was not a 
single commentator who failed to attribute the lion’s share in that 
victory to Yoram Aridor. But the cynics were wrong: Aridor had 
not instituted election year policies. He sincerely believed, apparently 
trusting the opinions of charlatans gathered around him in the 
administration of the Treasury, that it was possible to beat inflation 
by government subsidies, and that increasing balance of payments 
deficits were an annoyance but not a matter which ought to concern 
economic policy makers unduly. His greatest achievement was in 
disguising the theoretical and practical bankruptcy of his economic 
policies until mid-1983. He might not actually have had to admit his 
failure, had he not become involved in a side issue, the doctors’ 
strike, from which he retreated badly mauled. 

It is impossible to conclude this review of the Likud era in the 
Israeli economy without mentioning the appearance of the stock 
market speculator. The Tel Aviv Stock Exchange is as old as the 
state, and it had known steep rises in the mid-1960s. At that time 
some people made big, non-taxable, capital gains. But the 
speculator as a main actor in the economy and stock market specu- 
lation as a full-time occupation, something for which many 
abandoned their regular employment or business, was a novel 
development. By late 1982 stock market speculation had become a 
kind of popular sport; it was estimated that at that time more than a 
million people owned stocks or shares in mutual funds, and in most 
cases they bought securities in order to make capital gains through 
frequent purchases and sales. With the appearance of the 
stockholder, albeit in somewhat flawed form, the process of 
adapting the Israeli economy to the pattern common to all advanced 
industrial economies was complete. Henceforth anyone wishing to 
undo the process, either in response to external pressures or for 
ideological reasons, has to be aware that it is no longer possible to 
resort to the methods of economic management applied in the 



1960s, not least because of this addition to the cast of players on the 


1. Robert Nathan, Oscar Gass and Daniel Kramer, Palestine , Problem and 
Promise (Public Affairs Press, Washington, D. C., 1946). 

2. Verbal communication with the author. 

3. These figures are taken from Robert Shershewski, The Structure of the Jewish 
Economy in Palestine (Hebrew) (Maurice Falk Institute for Economic Research, 
Jerusalem, 1968). 

4. Don Patinkin, The Israeli Economy, The First Decade (Maurice Falk Institute 
for Economic Research, Jerusalem, 1967). 

5. Haaretz , 30 October 1977. 


Even before Menachem Begin shocked his colleagues by 
announcing that he intended to resign, there had been clear signs of 
a crisis brewing within the Likud and the Herut Movement. Rather 
naturally it became most visible in the two areas where Begin’s 
second government took its prime initiatives: in Lebanon and in 
economic policy. However, there is good reason to believe that an 
existential crisis was underlying surface events. Seventeen years 
after the formation and adoption of the national agenda of which 
the Likud was the outstanding proponent and more than seven 
years after the Knesset elections that brought the changeover in 
government the pendulum had begun to swing in the opposite direc- 

The swing may be said to have started with the elections which 
took place in July 1984 — or possibly even earlier, in the autumn of 
1983, with the new leader of the Likud, Yitzhak Shamir, inviting the 
head of the Labour opposition to join him in a Government of 
National Unity. On the face of it, this initiative proved a failure, but 
it did indicate a loss of faith by Likud leaders in their ability to carry 
on as before. Thus, it paved the way for Shimon Peres to force the 
holding of elections about a year and a half before the normal term . 

The elections did not produce a winner; but they did produce a 
clear loser, namely the Likud, which forfeited about 15 per cent of 
its parliamentary strength. More importantly, Likud came in 
second, behind Labour, in the private race between the two major 
parties, and thus was unable to scrape together a majority, however 
thin, to form a government under its own leadership. The details of 
the Likud leader’s struggle against the arithmetic of the election 
results and its inevitable outcome are not really important. What 
was important was the formation of a national coalition with 
Shimon Peres at its head. Peres was accorded a two-year term of 
office; under the deal, he was to hand over to Shamir for the second 
half of the four-year legislative term. But in the first half the 
Labour-Likud coalition is functioning as a Labour government, as it 
were. This can be seen clearly in the virtual cessation of new settle- 
ments in the administered territories, in the rapid pull-out from 


Towards the Next Changeover 139 

Lebanon, in the general shape of the economic austerity 
programme started in the summer of 1985, and in the receptive 
attitude to peace initiatives launched by President Mubarak of 
Egypt and King Hussein of Jordan. 

It is vain to speculate on the outcome of the 1984 elections, had 
Labour conducted them in a more combative fashion, that is, if a 
more strenuous effort had been made to draw a clearer line dividing 
Labour policies from those of the Likud. Equally vain is speculation 
on whether the Likud has lost its leadership position merely for the 
time being, owing to its mismanagement of the nation’s business in 
the years 1982^4, or whether this is a sign of a long-term shift in the 
political trend. But two points ought to be mentioned here which 
bear on the main thesis offered in this book: the change occurred 
against a background of confident predictions by Israeli 
psephologists that the Likud had in fact become the long-term 
majority party, and polls taken since the elections show a 
reasonably clear Labour lead. Add to this the continued disarray in 
the Likud leadership, both personal and political, and the 
conclusion seems to be that the Likud as the leading force in 
government is on the way out. 

Only the coming years, however, will conclusively tell whether 
history will repeat itself, that is, whether the Likud, like Mapai from 
1967 to 1977, will adopt a national agenda essentially alien to it but 
one put into practice, at least partially, under a Likud-led coalition; 
or whether a different government will come into existence to 
implement a new national agenda to which it is committed. 

We have already said that once the national agenda with which 
Mapai was identified had been accomplished, the party should have 
given way to another leading party in the elections of 1 961 , or , at the 
very latest, in 1965. However, poor organisation and lack of self- 
confidence prevented the opposition — particularly the Herut- 
Liberal bloc which arose before the 1965 elections — from clearly 
asking the public to draw the proper conclusions from Mapai’s 
programmatic exhaustion and to replace it with a government 
offering a substantially different vision and programme. Israel 
therefore continued to stagnate until the war in 1967 ; after it, and as 
a result of it, an alternative national agenda took shape rapidly but, 
by reason of historical chance — chiefly Moshe Dayan’s personality 
— Mapai came to execute it and continued to wield power and enjoy 
its perquisites. 

Looking at these events analytically, one can distinguish between 

140 Towards the Next Changeover 

those over which no control was exerted and those which were 
produced by conscious decisions made by the party leaderships in 
response to a given set of events. Both Herut and the General 
Zionists party drew the right conclusions from the clear signs of 
decline in Mapai’s authority, but co-operation between the two 
parties aimed at replacing Mapai and basing their policies on an 
alternative national agenda was delayed because of the hopes 
nurtured by the General Zionists — which proved to be vain — that 
they could form a coalition with Mapai. Here too a conscious 
decision was made: the General Zionists entered into partnership 
with the Progressives to create an atmosphere conducive to the 
renewal of the coalition with Mapai similar to the one which had 
existed in the early 1950s. This decision indicated that Yosef Sapir 
and his comrades lacked confidence in their ability to emerge 
victorious from a confrontation with Mapai, and perhaps also their 
unwillingness to identify with the Land of Israel plank in the Herut 
platform. However, by the time of the 1965 elections it had become 
clear to the General Zionists that Mapai had blocked the way to co- 
operation with them. Once again a conscious decision was taken: 
they split from the Progressives and entered into an alliance with 
Herut. It was, however, a hesitant alliance. The public had good 
reason not to place excessive faith in its pretensions to govern and its 
declared programme. The next important decisions were taken by 
Mapai, particularly in response to the pressure of the events of the 
Six Day War: namely, the cooption of Dayan, which implied the 
adoption of a national agenda different from their own and alien to 
their views. 

Today conditions are different: Likud is in the doldrums, there is 
a Labour Prime Minister who is very much in charge and Labour 
Ministers are quite comfortable in their jobs. However, as 
mentioned earlier, events can turn either way. The outcome 
depends on the decisions of the party leaderships, either to respond 
to grassroots pressures for a change or to make a deliberate attempt 
to carry on with the nationalist and expansionist agenda which has 
guided the national leadership since 1967. For some time, perhaps 
several years, such an attempt could well succeed. But sooner or 
later, the gap between needs as perceived by the public and the 
political elites, and the policies actually implemented on the basis of 
a national agenda which no longer represents the popular will, must 
lead to a crisis: then its replacement will be unavoidable (as was the 
case after the Six Day War). Even when a crisis of this sort leads to 

Towards the Next Changeover 141 

the replacement, not of one item or another in the policies of the 
government, but a shift of the entire set of co-ordinates of national 
policy, it is possible — as we learned from the example of 1966 — for 
the hard shell of the regime, which was identified with the previous 
national agenda, to remain intact, and only its substance to be 
replaced by something different as required by the new situation. 
Whether and how such a thing happens depends on decisions made 
by the party leaderships. In principle it can be said that the more the 
party seeking to make a change is identified unequivocally with an 
alternative national agenda — and this depends on the clarity of the 
identification, the definition of goals, and on their intellectual 
underpinning — the better its chances of replacing the government. 
In other words, clarity and the will to confront are at a premium for 
the opposition at a time when the continued existence of a national 
agenda is in the balance. This characteristic should be emphasised 
because the politics of a democracy — possibly of any sort of regime 
— tend toward the dead centre, at which public debate seldom goes 
beyond mere details about which decisions can be taken in routine 
discussions held in the political establishment, the Knesset and 
party headquarters. 

The Crisis in Likud 

Menachem Begin’s two governments never functioned harmoni- 
ously, and from the late summer of 1982 until the premier’s 
announcement of his wish to resign, the government was virtually 
paralysed. At first glance the main reason for the paralysis appears 
to lie in the events following the IDF’s penetration of West Beirut, 
more precisely, the massacre in the Palestinian refugee camps. But 
more careful scrutiny would show that even before these events, the 
sense of the political community was increasingly that the war in 
Lebanon was not turning out well. The most decisive evidence for 
this can be found in the plan put forward by President Reagan for a 
political settlement in the Middle East, under which the Americans 
proposed to bring the King of Jordan into the peace process and, 
with his co-operation, to raise the issue of sovereignty over Judea, 
Samaria, and the Gaza Strip. Begin rejected the plan out of hand. 
His rejection showed growing nervous strain and loss of confidence 
on his part, brought about by the difference between his expecta- 
tions of the war and its actual results. In any event, after witnessing 

142 Towards the Next Changeover 

the outburst of animosity against Israel during the war in Lebanon, 
the government must have sensed that if such was the reward for a 
military action, which by that time had left about 500 dead and 
thousands wounded, in an action, moreover, which was meant to 
serve US interests, its initiators, Menachem Begin and Ariel 
Sharon, must have made a bad bargain typical of political amateurs. 
There was a collapse of faith in what everyone had previously 
regarded as the Prime Minister’s forte: his authority in matters of 
foreign policy. A vicious circle then began: the collapse of his 
authority ate into Begin’s self-confidence and caused him increas- 
ingly to withdraw into himself; his withdrawal damaged what 
remained of the government’s inner unity and its members’ confi- 
dence in the Prime Minister; this, in turn, caused him to withdraw 
further into himself; and so on. However, typically for Israeli 
politics under the Likud, the disappointment over Lebanon, which 
was generally experienced even in the main governing party, was 
not given verbal expression : the Likud never held a post-mortem on 
the war. It did not call its leaders to account, blame anyone, single 
anyone out for praise, or demand anyone’s resignation. Neverthe- 
less, in the wake of a subterranean political process, overlaid by a 
continued decline in Begin’s physical and mental condition, the 
Likud came to resemble a decapitated body. 

From the establishment of the state, Israel had developed a 
political tradition according to which the operations of government 
were divided in two: foreign affairs and defence were the province 
of the Prime Minister, the Minister of Defence, and the Minister of 
Foreign Affairs; the rest came under the authority of the Minister of 
Finance. National policy was shaped, except between 1963 and 1969 
under Levi Eshkol, by people whose roots were anchored in their 
political and defence activities. The two governments of Menachem 
Begin reinforced that tradition. Yoram Aridor was able to exploit 
the freedom of action granted to him within this framework. 
Convinced that a magic formula had been revealed to him, whereby 
it was possible simultaneously to overcome three digit inflation and 
to maintain full employment and a constantly rising standard of 
living, he hastened to implement it. What his colleagues and outside 
observers viewed as a temporary pre-election trick later proved to 
be an article of faith for the Minister of Finance, which he was set on 
putting into practice once the Likud returned to power following the 
1981 elections. 

Even when the war in Lebanon was started, he did not exploit the 

Towards the Next Changeover 143 

opportunity to reverse the permissive policies he had instituted. The 
result, galloping deterioration in the balance of trade and the 
country’s external debt, was not slow in coming. In the summer of 
1983 a full-blown crisis developed, brought on by the deterioration 
in the balance of payments deficit . The most vociferous critics of the 
Minister of the Finance were his colleagues in the government and 
fellow-members of his party, but they publicised their doubts as to 
the validity of Aridor’s magic formula only after the sense that it was 
a fraud had become widespread. Possibly his critics might have 
delayed their attack even longer if the Minister of Finance had not 
become embroiled in the doctors’ strike. Owing to a tragi-comic 
misreading of the effect that granting an exceptional pay increase to 
the doctors would have on wage stability, he adopted an excessively 
rigid negotiating posture. In any case, the strength of his position 
and his immunity to criticism within the Cabinet were such that only 
resounding failure could unseat him. But the mess he had made of 
things was there for all to see, and although his comrades and 
colleagues joined in the assault upon him, they were viewed, as 
members of the same party and government, as equally responsible 
with the minister upon whom they now vented their anger and frust- 

There were clear indications that not only had the crisis engulfed 
Menachem Begin’s second government because of the disap- 
pointing results of the war in Lebanon and the increasingly evident 
difficulties in the economy administered by Yoram Aridor, but that 
the national agenda, of which the Likud was the outstanding propo- 
nent, had also lost its validity and no longer suited the public’s 
needs. There were signs that expansionist nationalism, the prime 
characteristic of the Likud agenda, no longer had the mass appeal it 
had enjoyed in the years prior to Begin’s rise to power, or again 
during the blistering months when foreign leaders antagonistic to 
Israel were showered with abuse, when Syrian helicopters were shot 
down in Lebanon, and when the nuclear reactor in Iraq was 
destroyed. Various hypotheses could be put forward as to what 
changed the public attitude. A possible explanation could be that a 
daily dose of provocative declarations was incompatible with the 
desire for full enjoyment of the material plenty promised by 
Aridor’s economy, including cheap foreign travel and the plentiful 
supply of Japanese consumer electronics. 

However, it would seem that the war in Lebanon played a 
particularly important part: it displayed, in television reports 

144 Towards the Next Changeover 

straight from the battlefield, what was implicit in Likud’s national 
agenda. The sight of the policies as they were being implemented, in 
fire and smoke, was brought right into the average Israeli’s living 
room. Pictures of killing and destruction apparently had an effect, 
just as similar ones had affected Americans in their homes during 
the war in Vietnam. It was Menachem Begin himself who created 
the indissoluble link between what the Israelis saw on television 
and, even more powerfully, what the soldiers experienced on the 
battlefield, and the boastful words accompanying these pictures like 
background music. It was his war, and the war of his confidants at 
the time, Ariel Sharon, Raphael Eitan, and the like — and, 
moreover. Begin had glorified this optional war, one which was not 
forced upon Israel, as the preferred instrument for his policies. It 
was the war, not as an abstract action, but as a sequence of 
distasteful events witnessed by everyone, with its optional character 
generally understood, which must be assumed to have aroused 
grave doubts as to the national agenda justifying it. 

Additional evidence of growing alienation from the expansionist- 
nationalist agenda can be seen in the diminished stature of Gush 
Emunim. The Gush had been one of the heralds of Likud rule and 
the main agent of its plan for conquering the land by means of settle- 
ment, which had been a distinguishing mark of Begin’s first term of 
office. After 1981 Gush Emunim was mainly visible in its attempts 
to delay, if not to frustrate, the withdrawal from eastern Sinai, and 
this brought it into head-on collision with its former partners, 
chiefly Begin himself. In the subsequent confrontation Gush 
Emunim came out as the loser; since then its actions have been 
limited to attempts to gain a foothold in Hebron and dig in, and to 
bloody conflicts in that city and around it. In any event, people 
stopped singing its praises and waxing enthusiastic over the 
pioneering spirit burning in the hearts of its members: romanticism 
— and Messianic fervour too — turned its back on the settlements. 

In any case, the entire settlement effort failed to gain mass 
support. From early 1981 until the time of writing, the number of 
Jewish residents of Judea, Samaria, and the Gaza Strip (excluding 
the municipal limits of Jerusalem) increased to almost 30,000, less 
than one per cent of the Jewish population of Israel, and about two 
per cent of the Arab population of these regions. The claim that 
such a marginal demographic change was sufficient to create an 
irreversible situation is unrealistic: a civilian population of this size 
is not strong enough to withstand military pressures from the enemy 

Towards the Next Changeover 145 

or, consequently, external political pressure. 

While many will remember 1982 as the year of the Lebanese War, 
others may recall it as the year of the stock exchange. It began with 
a fantastic boom, in which share prices became completely divorced 
from any economic basis. The end of the year saw the beginning of a 
prolonged collapse, bringing to light further underlying flaws and 
distortions and making people doubt the truth and authority of the 
economic views dominant during Menachem Begin’s second term. 
The Treasury and the other economic offices claimed that things 
were just fine, but the public was listening to other opinions. The 
President of the Manufacturers’ Association, for example, 
repeatedly warned that current economic policy would lead to 
disaster. The public was used to hearing criticism of the government 
voiced by the opposition or by the heads of the Labour-dominated 
Histadrut. But criticism coming not only from politically neutral 
businessmen, but from the very spokesman for economic circles 
which naturally tended to be close to the ruling party, was an 
altogether different matter. The doubts created by the war in 
Lebanon with regard to the correctness of the Likud philosophy and 
the validity of its response to political and defence problems, were 
joined by economic doubts: a complete Weltanschauung began to 
collapse in the aftermath of the events of 1982 and 1983. 

Even if affairs had been managed properly, Menachem Begin’s 
resignation from the premiership after a period of embarrassing and 
distressing decline, would have been a severe blow to the Likud. As 
noted above, the Likud, and more specifically its hard core, the 
Herut Movement, has no history, merely the biography of its 
leader. This explains the gravity of the resignation of the man who 
had embodied the authority and democratic legitimacy of the 
government just at a time of confusion when the political and 
economic way had been lost. The Likud was severely damaged. 
There is no more convincing evidence of its parlous state than the 
fact that when Begin’s successor, Yitzhak Shamir, was called upon 
to put together a coalition, he showed willingness to include the 
Labour Party. Shamir had not been enthusiastic about turning to his 
rival, and nor was his party. But the lack of firm opposition within 
the Likud to the very idea of partnership showed the extent of the 
confusion reigning inside the party and the feeling of helplessness 
which had gripped its leadership. This action recalls what happened 
to Mapai in its decline: when it had to resolve the quarrel that had 
broken out among its leaders during the Lavon Affair, it felt obliged 

146 Towards the Next Changeover 

to mobilise support from its rivals within the Labour Movement, 
and even outside it, in the media and the public at large. The very 
willingness to consider a national coalition (of the sort discussed in 
the autumn of 1983) in the middle of a parliamentary term was 
tantamount to a declaration of bankruptcy. It meant that the 
government, whose main policies were firmly anchored in the Likud 
precepts, no longer had the strength to offer solutions to the 
political problems at hand. By turning to the Labour Party, albeit 
under duress, the Likud showed that it had come to the end of its 

The elections held in 1984 demoted the Likud from its position as 
the leading party but did not eliminate it from the contest. Thus its 
situation came to resemble, to some extent, that of Mapai, which 
continued to lead governments even though, from an ideological 
point of view as well as organisationally, it had been ripe for 
replacement in the early 1960s. Exhausting the potential for 
leadership does not necessarily bring about an immediate loss of 
power. The reasons for Mapai’s survival as the leading party in the 
coalition have already been indicated above: the lack of an 
ideological alternative, i.e. an alternative leadership which could 
offer the people a new national agenda and which was capable of 
governing from an organisational point of view. Historical chance 
also played its part, as with Gamal Abdul Nasser’s mad decision to 
challenge Israel’s right to exist without being prepared to have his 
challenge taken up, or Moshe Dayan’s availability on the margins of 
Mapai, prepared to return to the fold with ideological baggage 
marvellously appropriate for the period after the victory. 
Unforeseen events, and leadership talents at present unknown or 
unrecognised, may again combine to bring about a Likud revival, 
despite its having exhausted the national agenda of which it had 
been the best representative . But as of now , the chances are dim , for 
Likud not only has to share with Labour the advantages accruing to 
a government in power, but its position on the nationalist right is 
being challenged by parties even more militant. 

The Likud’s national agenda has been taken as far as it will go. 
Part of it had already been implemented between 1967 and 1977, 
and the rest was put into effect from then until Menachem Begin’s 
resignation. Labour is now part of the government and will remain 
so, even if — and this is a big if — and when Peres hands over the 
premiership to Shamir. The public resources of Labour, including a 
large and faithful electorate and a ‘patriotic’ legitimacy conferred 

Towards the Next Changeover 147 

on it by its partnership in government with Likud, put it in a strong 
position in the race for power. However, from a programmatic 
point of view, the party’s features are — still — blurred. This was 
clearly shown during the election campaign and since. It takes a 
skilled observer to make out its programmatic features, for instance 
in the actions of its Cabinet Ministers, except for the more doveish 
cast of their foreign policy attitudes and the primacy attaching to full 
employment in the thinking of the Prime Minister. These are still a 
far cry, however, from constituting a new national agenda, around 
which a stable and long-term majority could rally, and which is the 
necessary and sufficient condition for providing the country with a 
strong and durable national leadership. 

The Two Agendas 

Since 1948 two national agendas have guided Israel. One turned 
inward, towards the absorption of immigration, towards con- 
struction and industrialisation; in its outward manifestations, it was 
minimalist, in other words, satisfied with the territorial basis 
created during the War of Independence and with the international 
status befitting a small state at the start of its existence. In 1967 the 
order was reversed. Territorial expansion, the digestion of the 
conquests of the Six Day War, and the creation of the status of a 
regional power were at the centre of the national effort. In domestic 
affairs the national agenda was characterised by a decline in 
government initiative. Social initiative became fragmented, passing 
to individuals, firms, and pressure groups. One can also differen- 
tiate between the two agendas in terms of the circumstances of their 
inception. The 1948 agenda came into being in response to 
constraints that were a matter of absolute necessity. The demands 
of absorption and development left the public and the government 
i no choice but to strain every muscle in a supreme effort to 

consolidate and strengthen the new state by assimilating, albeit in a 
crude fashion, a new population to the veteran Yishuv. In addition, 
there was military weakness. After the War of Independence there 
was not a single public body with any standing which actually 
proposed expanding the borders or improving the political status of 
the new state by means of force. In contrast, the national agenda 
which took shape after 1967 was predicated upon the opportunity 
created by the Six Day War: in other words, it was the product of 

148 Towards the Next Changeover 

choice made in the minds of the Israeli public, in response to 
geographical and political horizons which opened up in dramatic 
fashion. Now a new national agenda is taking shape, the third since 
the establishment of the state, again under rigid political and, 
particularly, economic constraints: and, as dictated by the 
circumstances of its consolidation, it is likely to be similar in 
tendency to that of 1948. 

It was noted above that the dynamism behind the conquest of the 
land through settlement has been halted. The general public was not 
tempted, despite the fortunes spent by the government, to promote 
it. The belief that Israel had the ability to play the role of a regional 
power also met with disappointment in Lebanon. To be a regional 
power means to be able to impose one’s will on one’s neighbours, 
largely ignoring external factors, i.e. the great powers. In Lebanon 
it was proved that, by these standards, Israel is not such a power: it 
was forced to stop the fighting prematurely, and even its immediate 
goal, the achievement of a political settlement with Lebanon which 
guaranteed the permanent removal of the PLO from its territory, 
seemed to be beyond its grasp. On the positive side, there is the 
continued military occupation of Judea, Samaria, and the Gaza 
Strip: in other words, the conquests of 1967 have not been lost 
(although today their maintenace demands a much greater effort 
than in the years immediately after the war). A number of settle- 
ments were also implanted in these areas, some of them with a 
certain vitality, others doomed in advance to degenerate or 
ultimately to be destroyed. 

In drawing up the balance sheet, therefore, one finds that the 
credit side is far from impressive considering the accrued costs of 
regional animosity, covert and overt, alienation from world 
opinion, whose support is still necessary for Israel, and the 
hundreds of dead and thousands of wounded in a war whose 
necessity has become increasingly doubtful. The economic balance 
during the past few years is also not particularly impressive. During 
the 1950s, 1960s, and also the early 1970s private consumption used 
up a large portion of the national product, some say too large, but it 
is a peculiarity of the late 1970s and early 1980s that consumption 
has been growing at the expense of an increased deficit in the 
balance of payments: loans taken out by the government (or 
guaranteed by it) in the international financial market have 
subsidised the increase in consumption. At the time of writing it is 
agreed that private consumption must be cut by as much as $2-2.5 

Towards the Next Changeover 149 

billion a year in order to restore the balance of payments, this figure 
being based on the assumption that the United States will continue 
to provide loans and grants intended, in principle, to assist with the 
burden of defence. To illustrate the magnitude of the task, this cut is 
equal to close on 20 per cent of what is spent annually on private 

Making a cut of this size is difficult in the best of circumstances 
and threatens more than a few social shocks. It is many times harder 
with three-digit inflation in the background. Inflation was accel- 
erated by the change in economic policy instituted at the start of 
Shamir’s Government. Reduction in the foreign trade deficit means 
a reduction in the supply of goods and services in the Israeli market. 
One need not be an economic expert to understand that if an 
increase in supply depresses prices, removal of part of that supply 
has the opposite effect. In other words, the problem of inflation, 
when it must be dealt with simultaneously with an acute balance of 
payments crisis, is particularly difficult to solve, the more so given 
the system of linkages in force in Israel , practically ensuring that any 
rise in price is automatically rolled over in salaries and linked invest- 

The Economy 

Economic development — and there is no doubt that the Israeli 
economy deserves to be called developed, both in terms of what it is 
capable of producing and of the scope and patterns of use by 
individuals and society — involves increased rigidity; the flexibility 
exhibited by the economy in leaping from the recession of 1966 to 
the boom of 1967 and 1968 is probably a thing of the past. 
Moreover, it is no longer certain that the public will again resign 
itself to a recession with the relative calm it showed in 1966, should 
a return to a deflationary policy be dictated by events as it was at 
that time in Israel and as has been the case since the beginning of the 
1980s in most countries of the West. 

The belief that it was possible to manage the economy in ways 
different from those employed during the three decades preceding 
the rise of the Likud has been shaken. The use of new control 
mechanisms, such as a floating exchange rate, the emphasis placed 
on the stock exchange as an independent source of investment 
capital, and the parallel retreat from the government’s position as 

150 Towards the Next Changeover 

the guide of economic development — all these failed to yield satis- 
factory results. Thus, for example, a short time after they were 
implemented, the rules for floating the sheqel were changed. The 
ministers who launched the float had expected a flight of capital, 
and they had probably prepared means for preventing it. In fact, the 
opposite took place, and the sheqel began to gain strength. It was 
only later that they realised that, for reasons of comprehensive 
economic guidance, the government had to intervene, in order to 
control the inflow and outflow of funds, and that this had to be done 
by instituting what is called in the jargon, dirty floating. 

As for the stock exchange, between 1977 and 1981 it worked satis- 
factorily as a financial market for the raising of investment capital. 
But in 1982 that market lost contact with reality: a mad boom 
developed which turned it into a casino where the main game, 
guessing future share prices, became the determining factor, as 
opposed to the asset value or other economic criteria. The boom 
continued for a year, followed by a market crash that wiped out half 
the value of the so-called free shares within six months. Towards the 
end of 1983 a second crash occurred. Bank shares had been manipu- 
lated by the issuing institutions until their prices on the stock 
exchange came to be double (as measured by the investment 
criterion known as the multiplier) or treble (according to the price- 
earnings ratio) their actual value. Now they were about to collapse 
because the banks no longer had the resources necessary to bolster 
the value of their own stock by purchasing excess supply. With the 
second crash, something unforeseeable took place: the government 
agreed to save the situation by means that were thought to be 
extinct. Politicians and bank executives agreed to convert the bank 
shares, the ownership of which implied unlimited risk, into 
government-backed bonds, the ownership of which entailed 
minimal risk. The technique by which this conversion was effected is 
less important in the present context than the fact that, in order to 
solve a market problem, the government resorted to means alien to 
an entrepreneurial regime, in which financial risk is an essential 
ingredient. Risk and profit are the two poles in the conceptual world 
of the entrepreneur: interest guaranteed by the government is the 
preferred method of encouraging savings in an economy adminis- 
tered along statist lines. 

It must be pointed out that when the banks appealed to the 
government for help, they did not do so on business grounds, as did 
the Chrysler Corporation when it asked the US Government for a 

Towards the Next Changeover 151 

bridgeing loan of less than two years' duration in order to avoid 
bankruptcy. The aid requested — and we are dealing here with sums 
more than double those requested by Chrysler — was unilateral and 
not conditional on a return by the recipient; there was no give and 
take, merely give, exactly as was usual in the golden age of the Sapir 
economy. To translate what happened during the bank shares crisis 
into financial terms, the business sector requested and received an 
open-ended government guarantee of its business activities, both 
generally and in specific areas. Logic requires that they accept 
government guidance as the unavoidable consequence. 

Under the Likud governments, especially after the appointment 
of Yoram Aridor as Minister of Finance, the government refrained 
from guiding economic development, that is, from shaping the 
future structure and capacities of the economy, or in other words 
the ability to produce and provide jobs and income under conditions 
of international competition. This task was left to entrepreneurs 
acting through the financial market, the stock exchange, and the 
banking system. The stock exchange and the banks are guided by 
considerations of short-term profit; they do not distinguish between 
initiatives which have general value and increase the competitive 
potential of the national economy, and those which rely on some 
temporary shift in the market, or whose profitability depends on 
special circumstances such as customs protection or transitory local 

Some people attribute this characteristic of economic 
management under the Likud governments to the personalities of 
the Finance Ministers. However, that is putting the cart before the 
horse: the only similarity between the politicians appointed to this 
post, whether an easygoing man like Simha Ehrlich or a bully like 
Yoram Aridor, was their indifference to the shaping of tomorrow’s 
economy. Both of them entrusted the function of planning 
investment to the business sector, whereas the Mapai Ministers of 
the Treasury, including those serving after their national agenda 
had been replaced following the Six Day War, viewed this as their 
most important task. 

It has already been shown that in a crisis the rules of the economic 
game were simply put aside. A new economic reality came to light, 
different both conceptually and in practice from the one that had 
shaped the original rules, and which, as it turned out, suited the 
game only while the going was good. During the first decade and a 
half of its existence, it was assumed that centralised planning was 

152 Towards the Next Changeover 

the right way to structure and operate an economy in keeping with 
the needs of the state, and that it was possible to harmonise the 
economic actions taken by individuals through decisions made by 
government planners. This assumption was shown to be essentially 
mistaken during the recession of 1966. After the Six Day War a 
change began to take place — it should be emphasised that the 
process was a gradual one — which placed the main emphasis on 
entrepreneurial decisions; the government gradually faded into the 
background, and towards the end of the process, left the stage 
altogether. But the events of 1983 demonstrated that in a crunch the 
entrepreneurial system was not strong enough to stand on its own 
feet. What is no less interesting, the system was also not intellec- 
tually independent, for if it had been, it would not have requested 
unilateral government assistance, and would even have rejected 
such aid had it been offered. 

The resolution of the economic crisis accompanying the transition 
to a new national agenda is conditional on a new synthesis between 
government planning and entrepreneurial management. The 
present-day entrepreneur is fairly well educated, experienced, and 
sufficiently self-confident to refuse to serve as the executive 
assistant of a minister or government bureaucrat. But for his own 
good he needs direction and someone to assume final responsibility 
for whatever actions are taken. The stock exchange and the 
financial system can provide him with money, but general goals, a 
stable framework for entrepreneurship, and assistance when 
difficulties arise must be looked for elsewhere. The division of 
labour between the government and the entrepreneur must be 
based on the particular characteristics of each party. The entrep- 
reneur carries out the market survey and identifies a specific field of 
activity, but the government must tell him whether what he has 
chosen serves the national interest, for example, improving the 
balance of trade, or geographical dispersion, or providing employ- 
ment, etc. The government must also make it clear to the entrep- 
reneur just what assistance it is willing to provide, in what areas, 
what is the extent of its aid, and what is expected in return from the 
recipient. In principle, it is preferable that the assistance be given, if 
it is given, through entrepreneurial channels (for example, the 
purchase of shares by the governmental agency on the floor of the 
stock exchange or subscription to new issues). The Industrial 
Development Bank should be revived and turned into a prime 
source of capital in cases where the risk might seem excessive to 

Towards the Next Changeover 153 

investors on the stock exchange, although acceptable to the govern- 
ment. Without going into detail, it would seem that the relations 
between the government and entrepreneurs on the model of those 
prevailing between an investment bank (what is known in Britain as 
a merchant bank) and its clients would probably be best. In line with 
what has been described here, the budget would once again become 
an active element in investment policy to help finance initiatives 
that serve the national interest. Conceptually this would be 
tantamount to a return to the Sapir era, with modifications due to 
the much improved quality of management in today’s firms, and to 
the government’s computer-assisted ability to control and super- 

The Emerging New Agenda 

It is not difficult to offer further evidence of the exhaustion of the 
national agenda predicated on territorial expansion and the 
enhancement of Israel’s international standing, and the govern- 
ment’s withdrawal from economic activity. However, there is no 
reason to do so: anyone still unconvinced by what has been said so 
far, namely, that the term 'national agenda’ identifies a significant 
variable providing a better understanding of political and social 
events in the past, and, to a degree, predicting the future, will not be 
convinced by further examples. Whatever the intellectual merits of 
the present argument, the time has now come to test its predictive 
power, with one self-explanatory reservation, however: external 
changes of the kind known as force majeure could easily throw the 
entire region into disarray, obliging Israel to adapt to them, even if 
doing so went counter to trends currently at work both within Israeli 
society and in the external environment. 

For the present, which might be of short duration or last a few 
years, Israel is undergoing a change in its national agenda. At the 
end of the changeover emerging at present one can make out the 
outline of a new national agenda concentrated on domestic reform. 
Economics will dominate that national agenda, the concern with 
frontiers and Israel’s international status taking second place, or at 
any rate a place less prominent than today. The reader who has 
followed the presentation of the central events of Israeli history in 
this essay, will easily perceive the striking similarity between the 
character of the national agenda between 1949 and 1967 and its 

154 Towards the Next Changeover 

predicted counterpart, as well as the difference, equally striking, 
between the guiding idea valid from the Six Day War until 
Menachem Begin’s resignation (a rather convenient bench-mark) 
and the main features of the future agenda. Just as it did after the 
establishment of the state and the War of Independence, Israeli 
society will now concentrate on internal reform. In the first 
instance, this will be in response to contraints; the era of territorial 
expansion ended in an economic crisis which revealed Israel’s 
dependence on external financing and endangered its sovereignty, 
the maintenance of its economic activity, full employment, a decent 
standard of living, and so on. Thus it appears that the sustained 
effort demanded to restore the situation, and the momentum which 
the public will have to gather for that effort, will place their stamp 
on the period before us and relegate other matters to the sidelines, 
or at least assign them a much lower place in the order of national 

Two comments are in order here. The transition from the 
Mandate to national sovereignty was characterised by unbounded 
enthusiasm and the release of great energies that had been pent up 
within the nation. Spiritual exaltation and the sense of vast horizons 
opening up also marked the transition from the period of stagnation 
and the days of siege and mortal danger before the Six Day War to 
the era of victory and conquest which began immediately after it. In 
contrast, the present changeover is heralded by signs that Israel has 
come up against a blank wall in the political arena, and by doubts in 
the country’s ability to achieve economic independence. Moreover, 
at least for the moment, there are no outstanding leaders or national 
heroes to lean on during hard times, to give direction to a confused 
nation that has lost its way. In short, for the period before us, there 
is no Ben-Gurion, no Dayan, and no Begin. 

Although the nation suffers from lack of optimism and 
authoritative leadership at a time when it must gather strength for 
the leap forward, this deficiency is balanced by assets accumulated 
over the years since the establishment of the state. First of all, the 
most important of all these assets might be called — for lack of a 
better term — political persistence. In the years after the estab- 
lishment of the state, Israel’s neighbours reckoned they were 
dealing with a temporary entity which, through a combined political 
and military effort, including an economic boycott, could be wiped 
out once and for all. They therefore applied constant pressure, 
sometimes in the form of an all-out military effort meant to put an 

Towards the Next Changeover 155 

end to the alien body whose existence gave no rest to the Arab 
world. In the Arab states’ estimate of the situation and the strategy 
they derived from it, time was the determining factor. The longer 
the foreign entity maintained its staying power under pressure and 
in war, the better it demonstrated the essential flaw in both the 
enemy’s estimate and its strategy, thus obliging Israel’s neighbours 
to relinquish them. In other words, by withstanding the continued 
tests to which it was subjected by its Arab neighbours, by defeating 
their armies in repeated wars, by creating a society and an economy 
and a firm network of relations with a super power and many other 
countries — all within three and a half decades — Israel posed a 
fundamental challenge to the Arabs’ estimate of their chances of 
ridding themselves of the Jewish state. Just as the sense of Israel’s 
temporary nature invited pressure and warfare, so withstanding 
pressure and persistence in the face of trials had the converse effect 
of weakening the hostile efforts of the kind made in the past. The 
results are evident: today Israel enjoys de facto peace with Jordan, 
de jure peace with Egypt, and something in between the two with 
Lebanon. No less important than these external signs of resignation 
to the Israeli existence, undesirable as they may find it, on the part 
of the Arab states, there are also signs of a resignation, however 
grudging, in their public opinion. Thus it can said that Israel has 
accomplished an historic achievement in its struggle with its Arab 
neighbours: it has made them re-examine their basic estimates of 
the situation, as well as the strategy adopted to achieve their goal. 
And even if, as many believe, the original goal has been retained in 
its essentials, a revision has been made with regard to the means 
appropriate to achieving it. From Israel’s point of view, this is 
tantamount to the coming into existence of a wholly different 
political environment from that which preceded it, requiring a 
redirection of its efforts and a reallocation of its resources. This 
finding is consistent with the estimate that the main effort in the new 
national agenda will be directed towards domestic reform, 
especially in the economy. Israel can now — probably from now on 
— afford to concentrate its efforts internally, in the civilian arena, 
although it will certainly have to continue following events on the 
other side of its borders with vigilance. 

The second asset is the economy itself. Although serious flaws in 
it have emerged recently, they derive mainly from management in 
need of improvement, perhaps even of a general overhaul. But this 
is not the same as starting from nothing. In thirty-five years an 

156 Towards the Next Changeover 

economy has come into being, parts of which can successfully meet 
the demands of the international market, particularly in the 
branches which are exposed to external competition or which 
supply the defence establishment. Here is one quantitative measure 
of the truth of this statement: in 1949 Israel probably did not export 
more than $100 million worth of goods; today annual exports total 
almost $11 billion. Admittedly, the dollar is not what it used to be, 
but a multiplier of 1 10 still serves as the reminder of an impressive 
success story. This achievement is the foundation upon which one 
can set the main pillar of the emerging national agenda, the essence 
of which will be the achievement of economic independence during 
the fourth and fifth decades of the state’s sovereign political 

In plain English, economic independence means increased 
exports. In principle the production of goods and services to replace 
imports is equivalent to production for export. However, the scope 
for replacing imports by enhanced local production is quite narrow, 
owing to the limited scale of the Israeli market; in such 
circumstances it is preferable to exploit the competitive advantages 
implicit in the importation of goods which are mass-produced 
abroad, and to make an effort to pay for them out of income derived 
from the export of goods and services in which Israel has a relative 
competitive advantage. If it had general advantages, such as low 
wages relative to productivity, there would be no particular diffi- 
culty in identifying goods and services which should be produced in 
quantity in order to increase exports (although it is clear that the 
benefit derived from this advantage would increase as the 
proportion of wages per unit of production increased). However, 
Israel does not enjoy a comparative advantage of that kind. 
Therefore half the job, if not more, is to identify a market on the one 
hand, and products or services on the other, which can be sold 
optimally in it. The entrepreneur is charged with identifying 
markets and products. Thus he plays a major role in implementing 
the national agenda in what remains of the 1980s and thereafter. 
However, the entrepreneur cannot do his job well in conditions of 
unreasonable risk; consequently he might prefer to produce for the 
local market, which he knows well, and which he controls at least 
partially or, if he possesses a monopoly, completely. A favourable 
rate of exchange or other incentives are often insufficient to offset 
the risk assumed by the entrepreneur bent on selling abroad: hence 
the large Israeli trade deficit. Under the peculiar circumstances 

Towards the Next Changeover 157 

obtaining in Israel, no one except the government is strong enough 
to share that risk and exert sufficient pressure on the entrepreneur 
or tempt him to seek his fortune in foreign markets. Ideally what is 
needed here is a partnership in which the entrepreneur would scan 
the horizon for markets, if necessary with government assistance, 
and organise production and sales. In developed industrial 
economies the entrepreneur’s partner is the institution that 
provides the funds, the bank, particularly the merchant bank. Its 
task is not limited to providing short-term loans; rather, it nurses the 
entrepreneur through the stages of project development, borrowing 
and raising capital in the stock exchange, setting up productive and 
marketing facilities, up to the point where he begins to make 
money. In Israel, the government, if it does place economic 
independence high on the new national agenda, will be called upon 
to act like a merchant bank. It will have to do more than create a 
favourable climate for exporters. Rather it must co-operate with the 
entrepreneur until the moment when he says ‘enough’ and declares 
that from now on he can stand on his own feet. 

What has been described here should not be interpreted as a 
return to the system of Pinhas Sapir, under which the entrepreneur 
was little more than a sub-contractor to the government bureauc- 
racy. Nor should it be seen as a mere sequel to the situation 
prevailing under the Likud, in which the entrepreneur does as he 
pleases and uses available sources of funds, the banks and the stock 
exchange, which are guided only by considerations of profit. The 
model to be borne in mind is the industrial organisation in Japan, or 
apparently in Singapore. Both these economies have been 
extremely successful due to the co-ordination of the activities of 
their leading companies with the governments, which see 
themselves as a combination of guide, partner in risk, assistant in 
development, raiser of capital, and marketing promoter. The more 
the government succeeds in making the economy into ‘Israel, Ltd’ 
on the Japanese model, the better it will advance the goal of 
economic independence. 

One of the difficulties in creating a partnership between the 
government and entrepreneurs of the sort just described is rooted in 
the approach of the average bureaucrat. He views his task as 
planning (in the past) or supervision (always), within the framework 
of a budgeted, hierarchical, and generally restricted world of his 
own making. This also applies to bureaucrats with specific qualifica- 
tions: economists, accountants, lawyers, etc. Businessmen have 

158 Towards the Next Changeover 

understood the need for developing a form of professional training 
especially suitable for those wishing to rise in the managerial 
hierarchy in business, commerce, and banking; business schools 
provide such goal-oriented training. But Israel does not possess 
educational institutions like the Ecole Nationale d’Administration 
(ENA) in France, particularly suited to people who see their future 
in the senior ranks of government and it certainly does not possess 
any special institution to train government administrators to fulfil 
the task described above, to be the actual partner of an entrep- 
reneur and exporter. This deficiency must be remedied; the diffi- 
culty of accomplishing a pioneering task of this kind must not 
prevent the attempt from being made. 

The establishment of an economic regime, as described above, 
could well move Israel forward on the path to economic indepen- 
dence. It does, however, contain an implicit danger of discrimi- 
nation and arbitrariness. Exporters will receive benefits denied to 
other entrepreneurs, and among those who receive benefits some 
will receive more than others. We are dealing here with human 
affairs, and some discrimination and arbitrariness inevitably creeps 
in. All that can be done is to attempt to limit what is undesirable by 
opening government control to public inspection, knowing full well 
that that is no guarantee of perfection. 

The events in the capital market during 1983, particularly during 
the second half of the year, and the decline in share prices as a 
permanent phenomenon, are open to two interpretations. 
According to one of them, that which falls will ultimately rise again; 
in other words, the stock exchange will revive and once again 
function as a source of capital for long-term investment. The other 
interpretation centres on the character of the activity which went on 
in the stock exchange; it came to Fesemble a casino, that is, the 
aspect of participation in a game of chance was effectively divorced 
from that of raising capital, the proper reason for the existence of a 
stock exchange. As long as the gambling encouraged lively activity, 
the capital-raising function was also served, although as an after- 
thought, as it were. But as the easy, tax-free capital gains dried up, 
the stock exchange ceased to function as a market for investment 
capital. In short, it could be said that in the Tel Aviv stock exchange 
the secondary became primary, and the primary secondary. There- 
fore, apart from transitory turns of events, it can no longer be 
counted on as a reliable source of investment capital. In fact, it was 
never meant to serve as the main source until the Likud govern- 

Towards the Next Changeover 159 

ments came along and burdened it with a task beyond its strength. 
The Likud governments abandoned the accepted practice both for 
ideological reasons and because of the growing demands of current 
outlays at the expense of resources which, in the past, had been 
channelled to fund the development budget. During the period 
under discussion the rate of investment declined dramatically. 
Whether the decline was attributable to an autonomous shift of 
economic resources or to the worldwide economic recession, or 
whether it was a consequence of a reduction in the governmental 
supply of investment capital on preferred terms, as was the practice 
before the Likud took power, is a question which deserves further 
investigation. In any event, the stock exchange could not 
completely replace the budget as a source of investment capital, 
despite the attractions of the tax-free status of capital gains from 
investment in shares. 

The conclusion that suggests itself here is that, in order to 
promote the raising of capital locally, the government must once 
again increase the share of the budget to finance development. This 
is consistent with what has been said above about the need to 
strengthen the government’s role as the promoter and dependable 
partner of entrepreneurial activities aimed at foreign markets. 
Naturally, it is easier to point out and justify such a need than to act 
to satisfy it. Government budgets have always been stretched past 
breaking point, as both defence expenditures and debt services have 
greatly increased, and also deliberate government activity in the 
area of welfare. It is very difficult to point to items in the budget 
which can be reduced or excised in order to free funds for invest- 
ment. However, competition for resources is the essence of 
economics, including competition between budgetary outlays on 
current expenses and capital investment. Suffice it to say here that, 
in order to implement the national agenda, future governments will 
have to channel certain resources into investment to help progress 
towards economic independence. 

Another important issue of principle remains: the government’s 
obligation to provide employment for all who wish to work. In 
Israel’s early years this obligation appeared to be a Zionist 
commandment: the government was positively required to ensure 
the productivisation of the Jewish people in its homeland and the 
inversion of its pyramid of employment. The policy of providing 
employment at any price was, to no small extent, behind the 
creation of jobs for mere show. It produced anomalies within the 

160 Towards the Next Changeover 

Israeli economy which continue to characterise it, and it is not at all 
clear that the continuation of this policy is consistent with the 
requirements of efficiency incumbent upon a national economy 
which has given the highest priority to balancing its foreign trade. 
These remarks do not refer merely to frictional unemployment, that 
is, unemployment deriving from the loss of certain jobs which no 
longer produce goods of competitive quality or price and which 
continues until the unemployed worker finds another job, more in 
keeping with market demand. By definition, frictional unemploy- 
ment is transitory and thus not of great concern to a government 
seeking to reform the national economy over a period of years 
(although from the short-term point of view, unemployment is 
unemployment, and those who suffer from it have a claim to assis- 
tance). The unemployment we are discussing here derives from 
overstaffing, brought to light by increased efficiency in individual 
plants and in the economy as a whole. 

What should be done with the unemployed, those who are thrown 
out of the process of production and who cannot adapt because of 
their age, location, or lack of training for the conditions imposed by 
an increasingly sophisticated economy? We have no ready answer 
to this question. But there is a principle to guide progress towards 
economic independence: one must not overload the productive 
process with social burdens. In other words, the obligation to 
provide full employment is not absolute. Therefore, if 
unemployment increases as a constant phenomenon during the 
years when the economy is striving for independence, the 
government must harden its heart and reconcile itself to the fact that 
a certain number of potential wage-earners — greater than has been 
tolerated up to now — will remain unemployed. As such, they will 
need to be supported by state and local welfare institutions. 

A Possible Peace Policy? 

Since 1967 Israel has concentrated on external matters which come 
under the general heading of foreign affairs and defence. 
Conversely, the emerging national agenda will concentrate on 
domestic, mainly economic, reforms. This is the active aspect, the 
field in which there must not only be achievements but achieve- 
ments which are highly visible. But a load of unsolved problems 
hang round Israel’s neck in the area of foreign affairs and defence, 

Towards the Next Changeover 161 

which will have to be dealt with if domestic reforms are to be carried 
out. The fact that between 1977 and 1981 Israel has spent an annual 
average of 20 per cent of available net resources (GNP plus net 
import capital) on defence makes any further explanation superf- 

The assymetry of Israel’s dispute with its neighbours lies at the 
root of its security problems, which are as old as the state itself. On 
the face of it , the Arabs lose only battles , never wars , whereas Israel 
knows that military defeat is liable to bring about the destruction of 
the Jewish state itself. Israel’s strategic goal has therefore been to 
remove this assymetry or to reduce it: significant, perhaps decisive, 
progress has been made in this area since the War of Independence. 
Some people hold that hatred for Israel is the source of the conflict. 
However, hatred neither kills people nor destroys cities; in the 
worst case it makes it easier for the leaders of the Arab states, who 
have decided to wage war against Israel anyway, to mobilise support 
for their action among public opinion in their countries. Thus, 
Israeli policy need not be directed at reducing Arab hatred — 
although activity in that direction is desirable in itself — but rather it 
should see to it that the Arab heads of state, whose considerations 
are no less rational than those of other politicians, dispense with the 
idea of waging war. In other words, to remove the sting of the 
assymetry from the conflict by postponing or nullifying the military 
option would answer the strategic needs which circumstances have 
imposed upon Israel. 

Some hold that the peace treaty with Egypt marks the settlement 
of the dispute between Egypt and Israel. This conclusion seems 
quite sound, although one should phrase it somewhat differently: 
today the Egyptians have no interest strong enough to justify going 
to war, even though war does not threaten their existence. Such an 
interest might emerge in the future, if the Israeli deterrent force 
became so weakened that making war against Israel, including war 
intended to wipe it out, seemed a trivial matter to the Egyptian 
leaders. But the chances that that might actually happen seem 
rather slim at the present time. It is not the peace treaty but rather 
the return of Sinai which has effectively removed the Egyptians 
from the group of actively hostile Arab states. In consequence, if 
Egypt remains outside that group, this will not necessarily be 
because it has joined a global system headed by the United States. 
Reconciliation with Israel is based on the settlement of the bilateral 
dispute between Egypt and Israel in a manner acceptable to Cairo. 

162 Towards the Next Changeover 

It would appear, given the limited risks entailed, that Israel could 
afford to leave the disputes with Syria and Jordan unresolved. 
However, these disputes should be viewed in a broader perspective 
— the desire to divert the main national effort from the long- 
standing concentration of concern on foreign affairs and security 
issues to the area of domestic reform. There can be little doubt 
about the essentials of the solution: it means giving the Arabs 
political control over the West Bank and the Gaza Strip. To apply 
the model of autonomy tried in Poland between the two world wars 
is quite likely to end the way that autonomy ended, first in the 
division of Poland, and later on, as a result of a war in which Poland 
played no independent role, turning it into a national state by bodily 
moving it westward. Those who advocate, for security reasons, 
offering the Palestinians territorial autonomy within the framework 
of the State of Israel , base their opinion on a single assumption : that 
Jordan will continue to be actively hostile to Israel, even following 
the transfer of large parts of Judea, Samaria, and the Gaza Strip to 
its sovereignty. This assumption entirely or partially contradicts the 
assumption underlying the peace treaty with Egypt, which has 
already been put to the test during the war in Lebanon and has 
proved its advocates correct. Autonomy within the framework of 
the State of Israel does offer additional security, but in return it 
brings constant friction with the Arab population. Furthermore, the 
acceptance of civilian responsibility for that population, in the 
economy, in welfare, in culture, etc. , would require the diversion of 
resources which are needed for other purposes far more important 
from Israel’s point of view. 

A purely Palestinian solution, that is, the establishment of a 
Palestinian state, is unthinkable since the Palestinian territorial 
claim is total and refers to the entire Land of Israel . Thus there is no 
room for compromise — the less so as the territory not in fact used 
by the Jews is insufficient for an independent Palestinian state. A 
rational Israeli policy would therefore work towards agreement 
with Jordan, including the transfer of sections of the Land of Israel 
to its control, either immediately or after a short transition period. 
A return to the Green Line (the 1949 armistice line) is also incon- 
ceivable: the Israeli public would not stand for it. On the other 
hand, even if Jordan were to agree in principle to a territorial 
compromise, it can do no other than reject the borders proposed by 
the Allon plan, which envisages an Arab enclave in Judea and 
Samaria entirely surrounded by Israeli territory. This peace plan, 

Towards the Next Changeover 163 

named after its initiator, the late Yigal Allon, is a clever gimmick 
rather than the sum of all political and military wisdom. The Jordan 
River does not constitute a boundary which is important for Israel’s 
security, according to the book by Brigadier General Arieh Shalev, 
A Line of Defence in Judea and Samaria . 1 If the area transferred to 
Jordan were kept free of heavy weapons and if IDF observation and 
listening posts were emplaced on the crest of the hills under the 
terms of the agreement, Israel’s security needs would have been 
met. Such an arrangement would hold even more if the Israeli 
border were moved a few kilometers to the east along its entire 
length, with a somewhat deeper bulge in the north of the West 
Bank. A significant part of the settlements established since 1967 
would then be included within Israel’s sovereign territory; the 
existence of the rest would depend on the agreement with Jordan 
and the willingness of the settlers to live under foreign rule. 

Many people in Israel labour under a common delusion: that it is 
possible to resolve any political dispute in one go, either by 
advancing or withdrawing, depending on whether one views it from 
the right or the left. There are, however, disputes which are only 
settled after a great deal of time has passed, or which remain 
unresolved for ever. Israel’s dispute with Syria seems to belong to 
the latter category, especially in view of the annexation of the Golan 
Heights and their having become a populated part of the State of 
Israel in every respect. The notion that it might be possible to 
compensate Syria by giving up control over part of Lebanon has at 
least two flaws: Israel has no effective control over Lebanon which it 
is able to give up; and Syria’s political ties, especially with the Soviet 
Union and the PLO, make such an agreement impracticable. An 
agreement with Syria based on the exchange of the Golan for 
Lebanon would put the PLO back on Israel’s northern border; and 
if Syria were to seek to prevent PLO activity from there, it would 
lose its legitimacy in the eyes of the Palestinian diaspora. However, 
the direct difficulty lies in Syria’s imperial dreams, which impel it to 
take steps intended to weaken the Israeli and Jordanian govern- 
ments: a pro-Syrian PLO is a tool for this purpose, and the PLO, 
based in Lebanon and controlled by Syria, can exist only if it 
remains subject to Syria and carries out its policies. In contrast, an 
agreement with Jordan, of the type mentioned above, would effec- 
tively make Israel Jordan’s ally: the alliance would find expression, 
among other things, in Israeli assistance to Jordan to maintain the 
agreement between them and to protect Jordan’s border with Syria. 

164 Towards the Next Changeover 

One might say that in the proposed peace policy, which is also a 
policy for weaning Israel from its prolonged and obsessive concern 
with foreign affairs and defence, Israel must choose between a 
Jordanian or a Syrian orientation: the two are mutually exclusive. 
Presuming, of course, that there is a realistic choice between the two 
— which is not in fact so — Israel will therefore have to resign itself 
to Syrian hostility, at various levels of intensity as a long-term 
phenomenon. The price of this will necessarily be expressed in 
forms of Israel’s military deployment, based on the assumption that 
the northern border is active and liable to erupt in warfare at very 
short notice. In any event, the contact line with Syria is liable to 
require continuous attention, approaching a state of constant 
military alert. In the foreign and military policy formula proposed 
for Israel, ‘Obtain political settlements so that you may turn your 
back on the Arabs’, relations between Jerusalem and Damascus 
cannot be included. 

As noted above , Israel annually spends about 20 per cent of its net 
resources on security. Up to and including 1968 the figure was not 
even 10 per cent. An enormous military achievement like the 
victory in the Six Day War did not serve to reduce the defence 
burden. On the contrary; from 1967 on defence expenditures settled 
at around an annual average of 20 per cent of the total net resources 
available to the economy, a burden which was very hard to bear, 
and which, it seems, is no longer necessary. There are several 
reasons for this. The policy of agreements, which in the case of 
Egypt has already produced positive results, and which is likely to 
produce similar results in the Jordanian-Palestinian context, 
reduces the need for vigilance (which devours most of the 
resources). Israel has two further security assets, both of them on 
the strategic level, and each at a different stage of development, 
either of which could deter the Arabs from launching 
comprehensive military action against it. 

Relations with the US 

Since the late 1960s the United States has become Israel’s main 
supplier of weapons; apart from this, it has financed the lion’s share 
of the balance of payments deficit and provided political protection 
when needed. The American obligation, which Presidents of the 
United States have proclaimed on various occasions, was originally 

Towards the Next Changeover 165 

unilateral, but over the years it has changed somewhat and turned 
into a give and take relationship; the United States expects, and 
receives, a return for its assistance, either in information or in a 
degree of involvement whenever problems arise in which an Israeli 
stand or action might carry weight, either as a sovereign state or as 
the focus of the Jewish people. In one way or another a very special 
sort of relationship has developed between Israel and the Western 
superpower. This, if it were strengthened just a little more, would 
deter any other country, including the USSR, from using military 
force against Israel or, if the warning proved ineffective, would 
ensure logistical assistance in time of war, or even direct US 
involvement in the hostilities. 

It is quite likely that if Israel made a serious effort to settle the 
question of its eastern border, relations with the United States 
would become much closer. The United States took it upon itself to 
achieve such a settlement as part of the efforts of President Carter to 
bring about the signing of the Egyptian-Israeli peace treaty, to 
which he attached a US guarantee. In view of this precedent, it is 
conceivable that, as part of an Israeli-Jordanian-Palestinian agree- 
ment, the United States would sign a defence treaty with Israel 
(perhaps in parallel with one with Jordan too). Something like a 
defence relationship between Israel and the United States already 
exists in fact, and is publicly known; the chances of formalising it in 
a treaty are quite good, especially against the background of the 
achievement of an American policy goal by settling the issue of 
Judea, Samaria, and the Gaza Strip. If there had been such a 
defence treaty, it is doubtful whether the Lebanese War would have 
been undertaken. Furthermore, an Israeli government which 
adapted its policies to the requirements of a national agenda princi- 
pally concerned with domestic reform would not pose a difficult 
security problem for Washington. 

The idea of striving for a defence treaty with the United States has 
already been discussed theoretically; and some convincing 
arguments have been raised against it. Two deserve closer consider- 
ation. One is that the signing of a defence treaty effectively cancels 
out Israeli sovereignty, in that it subjects its right to make war, even 
in self-defence, to the assent of its partner — when the right to go to 
war is the essence of sovereignty. The other argument is that Israel 
cannot count on the United States to fulfil its obligations, and that, 
even if it does fulfil them, the processes prescribed by American law 
would necessarily delay assistance so as to deprive it of any real 

166 Towards the Next Changeover 

value. The second of these objections has greater merit: the 
American Constitution stipulates that a congressional review of any 
treaty is decisive, in other words, the action of signing a treaty 
merely indicates the acceptance of conditional responsibility. 
However, during the Yom Kippur War it was shown that, without 
any defence treaty, the United States was prepared to offer logis- 
tical assistance with no bureaucratic delays. Moreover, inasmuch as 
the treaty would confirm an already existing common interest, it is 
likely that the promised military assistance would in fact be forth- 
coming. At the very least, any potential enemy would need to 
consider the possibility that the United States would honour its 
treaty obligations: its deterrent value is therefore indisputable. As 
for the argument about limiting Israel’s sovereignty implicit in the 
right to make war, in fact, although the right to start a war does not 
at present depend on American approval, the ability to continue it 
certainly does. If anyone needs proof of that, let him simply look at 
what happened during the Sinai Campaign in 1956, the Yom Kippur 
War, and in Lebanon: all three wars were halted when the United 
States indicated that it was time to stop. Therefore, since Israeli 
sovereignty is limited in any case, to limit it in advance is no real 

Regardless of the problems inherent in a defence treaty with the 
United States, if the two sides were to sign one it would be likely to 
offer a partial substitute for budgetary outlays on defence. A 
defence treaty is not, however, the only substitute. For some time 
now Israel has had a nuclear option. But it is an option, as the late 
Haim Laskov said, like the Hanucca lights, 2 which are meant to be 
seen but never used. Others are of a different opinion, however. 
Several years ago Moshe Dayan proposed that the option be 
acknowledged, that is, revealed and, of course, included among the 
weapons at Israel’s disposal, either to make the enemy see and 
beware, or else to be used in time of extreme danger. In other 
words, Dayan regarded the Israeli nuclear capability, the existence 
of which he assumed, for the sake of argument, as a deterrent, but 
also as a military potential, i.e. as a substitute for other defence 
resources which could be dispensed with thanks to the nucleari- 
sation of Israeli strategy. Others have made similar proposals, and 
recently Dr Shai Feldman of Tel Aviv University published a book, 
A Nuclear Deterrent for Israel , 3 which analyses the subject in detail 
and offers a well reasoned and fully documented proposal for basing 
Israel’s strategy on nuclear weapons, both because of the effective- 

Towards the Next Changeover 167 

ness of nuclear deterrence and because of its relatively low cost. 

It is quite likely that in the foreseeable future Israel will not be 
able to combine a defence treaty with the United States and the 
adoption of a strategy of nuclear deterrence, since this would be 
inconsistent with the US aim of preventing the proliferation of 
nuclear weapons. A choice between the two must therefore be 
made. Some would prefer nuclear deterrence since it does not entail 
either dependence on US willingness to help Israel in time of war or 
a concession of sovereignty. However, self-reliance and insistence 
on complete and unquestioned sovereignty carry a big price tag: the 
actual decision to use nuclear weapons is an extremely difficult one, 
particularly if the political leadership is not sufficiently determined, 
or if there is some doubt as to whether they have convinced their 
own people and the enemy that they are prepared to go to the limit. 
There is also the argument that human beings should not be saddled 
with the awesome responsibility of using such destructive weapons. 
Whoever acquires nuclear deterrence also acquires a unique 
phsycological and moral burden. It must be remembered that a 
country which bases its security on nuclear deterrence and, when 
necessary, the use of nuclear weapons, and then fails to convince 
itself and others of its resolution to carry that strategy to the bitter 
end, is actually betraying its security. 

In concluding this brief survey of the options open to those 
wishing to reduce the burden of defence expenditures, we must 
recall the general political framework in which the choice will be 
made. The objective is the transfer of public attention inwards, to 
strengthen the country’s economic muscle and improve its social 
functioning, to reduce tensions among its citizens and to create a 
more decent relationship between the individual and the national 
government, professional unions, and local authorities. Without 
denying the importance of the security of borders and lines of 
defence in the new national agenda neither will possess the 
existential value attributed to them since 1967. The circumstances 
which justified devoting the main resources of the state to them and, 
as a corollary, giving Israel’s international status highest place in the 
national order of priorities no longer exist. From now on Israeli 
policy is likely to be essentially defensive, which is likely to blunt the 
sting of an American-Israeli defence treaty or the adoption of a 
nuclear strategy, no matter which is chosen. Once the decision is 
made regarding a territorial settlement on Israel’s eastern border 
along the lines sketched above, and consequently only Israel’s 

168 Towards the IS! ext Changeover 

northern border with Syria remains active, two tasks will remain for 
the managers of Israel’s foreign policy: the taking of preventive 
diplomatic measures against anything liable to upset the peace, and 
the promotion of foreign trade. 

We have now presented the main outlines of Israel’s national 
agenda for the next decade and a half. Some people might argue 
that the proposed agenda ignores certain topics which are 
unavoidable in any discussion of Israeli politics. To mention just 
two of them: is it not an error to neglect the problem of ethnic 
groups, the so-called social gap and its accompanying tensions, the 
solution of which must be accorded a high national priority? And 
can any serious discussion of the Israeli economy afford to ignore 

The omission of the Ashkenazi-Sephardi problem in the above 
agenda was intentional. Tensions exist in any society: their origins 
can be ethnic, class-based, or cultural. The relevant question here is 
whether the tensions place their stamp on society or whether they 
are secondary to other issues of greater intensity. For example: 
there is the preoccupation with race in present-day South Africa; 
there were the religious wars of seventeenth-century Europe and 
the class struggle of nineteenth-century materialism. There can be 
no comparison between these dominant social conflicts and the 
controversy bearing on ethnic differences between Ashkenazis and 
Sephardis in contemporary Israel. 

Inflation is essentially a cop-out of governments which have failed 
to achieve a reasonable balance between their expenditures and 
revenues. It now appears that the Israeli Government is on the way 
to correcting its profligate spending habits. But it is a truism that the 
stabilisation of the purchasing power of the country’s currency is 
secondary to a general solution of its main economic problems 
particularly to the achievement of economic independence, that is, 
to getting the economy to stand on its own feet. A national agenda 
centred on domestic reform will therefore include dealing with 
inflation, but subject to the dictates of the principal economic goal, 
the achievement of economic independence — without entering 
here into a discussion of the precise meaning of that phrase. 

Politicians are not free to choose a national agenda. Their job is to 
serve as the midwife to an agenda which answers to the public’s 
sense of its needs. The ability to identify the ingredients of a 
national agenda and to formulate and implement it sets apart politi- 
cians of stature: parties led by men blessed with this gift and which 

Towards the Next Changeover 1 69 

identify themselves with the dynamic of a given national agenda 
have a good chance of taking power and retaining it for a long time. 


1. Arieh Shalev; A Line of Defence in Judea and Samaria (Hebrew) (Hakibutz 
Hameuhad, Centre of Strategic Studies, Tel Aviv, 1982). 

2. Hanucca is the feast of lights, commemorating the victory of the Maccabees over 
the Syrians in the second century BC and the rededication of the Temple. 

3. Shai Feldman, A Nuclear Deterrent for Israel (Hebrew) (Hakibutz Hameuhad 
Tel Aviv, 1983). 


Africa, Jews from 5, 9-10, 27-9, 53-4 
agenda, national 

borders issue 41-3, 48-51, 54, 72-3, 

defence issue 29 
definition of 6-7 
emerging 153-60, 168 
expansionist nationalism 143, 146; 

see also Begin, Menachem 
on Independence 8-10, 79, 139, 147, 

peace issue 29-32, 161-7 
settlement issue 9-10, 82-5 
two agendas 147-9 
Agranat, Shimon 64 
Commission Report 64-5, 67 
agriculture 107-9, 1 13 
Ahdut Haavoda 20-1 , 32n 
aid, foreign 24, 1 10-1 1 
from USA (r/.v.) 10,55-6,58-62 
air force, Israeli 65-7 
alienation of people from government 
Allon, Yigael 38, 41 , 46, 69, 72, 162 
Plan 162-3 

Arab-Israeli relations 29-32, 37, 45-7 
Arab attitudes 37, 46, 54, 73, 155, 

coexistence 42, 46, 84 
Arafat, Yasser 79 
see also Palestine Liberation 
Arian, Asher 101 

Aridor, Yoram 100, 125-6, 132, 135-6, 
142-3, 151 


from USA 33, 59-60 
nuclear 166-7 
see also defence industry 
Ashkenazi-Sephardi differences 9-10, 
53-4, 168 

Asia, Jews from 4-5, 9-10, 53-4 
atonement 104-5 
Attrition, War of 44-5, 55 

Bader. Dr Yohanan 31 

balance of payments 1 10-1 1 , 123-6, 
148-9, 156 

Barzilai, Amnon 100 
Begin, Menachem 
and Dayan 49, 103, 133 
and Herut 31 

and Sharon 81, 91, 93, 96, 133 
borders policy 44,51, 81-3 
decline 141-3 

election victory 1-2, 79-80, 132 
ideology 88, 98-9, 102-5, 135 
Lebanon war 91-8, 142-4 
peace with Egypt 80-2 
resignation 138, 145-6 
settlement policy 83-5, 91 
Six Day War 38 
supporters of 4, 90 

Ben-Aharon, Yitzhak 23-6, 29, 52, 129 
Ben Elissar, Dr Eliahu 3 
Ben-Gurion, David 
and NATO 47, 58 
criticism of 15, 20 
defence doctrine 29-30 
identification with the state 1 , 5, 8, 

Lavon and Sharett affairs 12-16 
peace proposals 41 
re-election 11, 14 
removal from Mapai 6, 15, 19 
borders of Israel 40-8, 72-3, 80-4 
and future peace 1 62—4 
see also settlement 

Carter, Jimmy 81, 103, 165 
Clausewitz, Karl von 32, 97 
corruption 4, 74 

Dayan, Moshe 
and Begin 49, 103, 133 
and the Labour Party 37-8, 49-50, 
as leader of Israel 35, 42-4 
borders policy 4 1-4, 50, 55, 81 , 83-5 
coexistence 42, 46, 84 
criticism ofHistadrut 16-17,29 
nuclear policy 166 


Index 171 

opposition to Mapai 16-18 
vSix Day War 33, 35-40 
Yom Kippur War 64-5, 67-72 

expenditure on 59-60, 161, 164 
industry 17, 117-18, 121, 127 
see also arms; Israeli Defence Force 
Democratic Movement for Change 
(DMC, Dash) 3-4, 74, 80, 100 
demonstrations 27 
‘deproductivisation' 127, 131 
towns 16-18 
see also industrialisation 
diamond industry 120, 124 
discrimination, ethnic 10, 26-9, 53-4 

Dori, Ya’akor 12 

Eban, Abba 33 
economy, national 
after Independence 10-11, 107-10 
and territory 74 

balance of payments 110-11, 123-6 
148-9, 156 

co-ordination of 157-8 
ideologies 127-32 
Likud policy 100, 125-6, 133-6, 
142-3, 151, 158-9 
Mapai policy 76-8, 125-6 
recession 17-19,33,48-9, 126 
see also industrialisation 
Eden, General 66 

negotiation with 55-6, 80-1 
peace treaty with 80-4, 155, 161 
Six Day War 34-7 
War of Attrition 45, 55 
Yom Kippur War 66-71 
Ehrlich, Simha 133, 135, 151 
Eisenstadt, Professor Shmuel 26, 29 
Eitan, Raphael 92^1, 144 
elections, Knesset 
1948 1,11 
1961 1,15 
1965 19, 63n 
1969 50 
1973 2,71, 101 
1977 2-3, 80, 100-1 
1981 101 
1984 138-9, 146 
electricity, generation of 117-18 
employment, levels of 10-11, 19, 123, 
126, 130-1, 159-60 

entrepreneurship 22, 77-8, 1 14-17 
Eshkol, Levi 
death of 49 

‘new’ Labour government 6, 19-21 

policies 113, 115-16, 126, 142 
Six Day War 36, 38 
ethnicity 10, 26-9, 51^1, 168 
exchange rate 134, 149-50 
expansionist nationalism 143, 146 
see also Begin, Menachem 
exports 110-11, 123-6, 156 

Feldman, DrShai 166 

Gahal 20,38,48-51,78 
Galili, Yisrael48,69 
Gass, Oscar 108-9 
General Zionist Party 15, 20, 48 78 

Geneva Conference, Arab-Israeli 71 
Goldman, Nahum 56 
Green Line ( 1 949 armistice borders) 
46, 162 

Guibli, Benyamin 12 
Gush Emunim 84-91 , 144 

Haifa, riots in 26-7 
Haig, Alexander 95 
Hamashbir Hamerkazi 22, 1 1 2 
Hammer, Zevulon 88 
Hashomer Hatzair (later Mapam q. v ) 
20, 32n, 49 

Herut Movement 1, 15,31,48-9 
economic policy 78, 135 
origins 99-100 

see also Begin, Menachem; Likud 
Histadrut 4, 12-17,52, 145 
Dayan's criticism of 16-17, 29 
enterprises 22, 1 12, 116 
Lavon affair 12-16 
Sick Fund 4, 74 
Hitler, Adolf 97-8 
Holocaust, the 104-5 
Horowitz, David 1 1 
Horowitz, Yigael 99, 133, 135-6 
Hussein, King of Jordan 39-40, 48 


discrimination against 9-10, 27-9 

politics 4-5, 90, 101-2 

172 Index 

immigration policy 9-1 1,21-2 
income distribution 22, 87, 129 
independence 1 , 8 
economic 110-11, 156-7 

government control of 1 16-17, 152 
under Peres 17-18 
under Sapir 77-8, 112-23 
inflation 31, 111, 123-6, 134, 149, 168 
international opinion 78-82, 96, 148 
iron Ram’ war games 66-7, 69 
Israeli Defence Force (IDF) 
and defence industry 118 
doctrine 29, 31, 68-9 
Six Day War 34-6 
War in Lebanon 94-5 
Yom Kippur War 64-7, 71 

Jabotinsky, Zeer 83-4, 99 
Jerusalem 40-1 
Jesus of Nazareth 104 
Jewish Agency, the 2, 108, 121 
Johnson, Lyndon B. 59 
Johnston Plan 34, 63n 

peace with 155, 162-5 
Six Day War 39-40 
war with PLO 48,55 

Kahan Commission 96 
Khartoum Conference (Arab summit) 
37, 46, 54 
kibbutzim 89 
King, Martin Luther 52 
Kissinger, Henry 69-73 
Knesset see elections 
Kokhav, David 1 16 
Koor22, 112 
Kosygin, Alexei 33 
Kramer, Daniel 108-9 

Labour Party (previously Mapai q. v . ) 
and peace 54-7 

coalition with Likud 138-40, 145-6 
corruption in 4, 74 
defeat in 1977 2-6 
reform of 23-4 
Yom Kippur War 68-74 
Land of Israel, the 43, 46, 81-5, 92, 

140, 162 

Society for 85, 106n 
Lanir, DrTswi 2, 66-7 
Laor, Yitzhak 85-6 
Laskov, Haim 166 

Lavon, Pinhas 12-16 

Lebanon, war in 91-8, 141-4, 148, 166 

Levine, Hanoch 57 

Levinger, Rabbi 90 

Liberal Party 15, 48, 133-5 


and Begin 102-5 

coalition with Labour 138-40, 145-6 
crisis in 141-7 

economic policy 125-6, 133-6, 
election of 1 ,4 
international relations 79-80 
origins 20 
policy 98-100 
Livne, Eliezer 50 

Mandelbaum, Moshe 122 
Mapai (Mifleget Poalei Israel, 

Palestine Workers’ Party; later 
the Labour Party q. v . ) 
aliance 20-1,23,25 
alienation of people from 14-16 
and Dayan 42^4, 50, 55, 64, 68-70, 


at Independence 1,8,11 
definition of 21-6 
economic policy 76-8, 125-6 
immigration policy 9-1 1 
‘New Alignment' 19-21,23,48 
rise of opposition to 1 6- 1 9 
Six Day War 38, 49 
supporters 5 

Mapam (United Workers' Party) 20, 

23, 32n, 49 
Marcus, Yoel 50 
Marx, Karl 129 
Matzpen 53 

Meir, Golda 22, 49-50, 56, 64, 70-2 
Meshel, Yeruhoam 129 
Mikardo, Ian 122 
Mubarak, Hosni 139 

Nasser, Gamal Abdel 34-6, 48-9, 55 

Nathan, Robert 108-9 
National Religious Party (NRP) 3, 


New Alignment 19-21,23,48-50 
New Left 53 
Nixon, Richard M. 59 
North Atlantic Treaty Organisation 
(NATO) 47, 58 
nuclear policy 166-7 

Index 173 

occupied territories 38-43, 50-1 , 72-3 
76,81-2, 162-3 
Ofer, Avraham 74 
Olsen, Yitzhak 12 
Oriental Jews 

discrimination against 27-9, 53-4 
immigration of 9-10 
politics 4-5, 90, 101-2 

Palestine Liberation Organisation 

and Syria 163 

war in Lebanon 91-8, 141-4, 148 

war with Jordan 48, 55 
Palestine Workers' Party see Mapai 
‘Panthers’ 52-3 
Patinkin, Professor Dan 122 

debate 45-8, 50-1 , 54-7, 80-2 
future 160-4 

treaty with Egypt 80-4, 155, 161 
Peres, Shimon 3, 17-18, 72, 138, 146 
population 9-1 1 
poverty 10-11,27,51-2, 129 
prime ministers see Ben-Gurion 
(1948-52, 1955-61); Sharett 
(1952-5); Eshkol (1961-9); Meir 
(1969-73); Rabin (1973-7); Begin 
(1977-83); Peres (1 984-?) 
‘productivisation’ 77-8, 112-23, 128 

Progressive Party 48, 140 
‘Queen of the Bathtub, The’ 57 
Raanan, Tsvi 89 

Rabin, Yitzhak 4, 34, 62, 68, 72-4, 82 
Rabinowitz, Yehoshua72, 74, 135 
Rafi (Israeli Workers’ List) 40, 63n, 76 
Reagan, Ronald 94, 141 
Reisser, Micha 3 
Rogers Plan 60 

Sadat, Anwar 55, 71, 73, 80-2, 103 
Salpeter, Eliahu53 
Sapir, Pinhas 22, 74, 77-8, 112-23, 
125-7, 157 

Sapir, Yosef 38, 48-9, 140 
Sephardi-Ashkenazi differences 9-10, 
53-4, 168 

settlement 82-5, 88-9, 107-9, 144 
Shalev, Brigadier General Arieh 163 
Shamir, Michal 101 

Shamir, Yitzhak 94, 138, 145-6, 149 
Sharett, Moshe 13-14 
Sharon, Ariel 

and Begin 81, 91, 93, 96, 133 
and Gush Emunim 84, 88 
and Lebanon War 91-6, 142-4 
and occupied territories 8 1 , 84, 1 03 
Shavit, Dr Yakov 83 
Shlomtsion Party 101 
Siah 53 

Sinai Campaign 18, 30, 36, 166 
see also occupied territories 
Six Day War 33-7, 65 
socialism 22-5,52, 128-9 
Society for the Land of Israel 85, 106n 
Solel Boneh 22, 112 
‘Song of Peace, The' 56-7 
Soviet Union 33, 35, 59 
‘statism’ 8, 23 

stock exchange 136, 150-2, 158 
Syria 34, 94-5, 163-4 

Tal, General Yisrael 31 
Tel Aviv Stock Exchange 136, 158 
Tiran, Straits of 34-7 
Tsemach, Dr Minna 4 
Tsur, Michael 74 

unemployment 10-11, 19, 123, 126, 
United Nations 
and Israeli independence 8 
Resolutions: against Zionism 79; 
peace conference 71 ; withdrawal 
from occupied territories 5(M 
United States of America (USA) 
aid from 10,55-6,58 
and Soviet Union 58-9 
and war in Lebanon 94-6, 166 
arms from 33, 59-60 
black civil rights movement 52-3 
defence treaty possibilities 165-7 
relationship with Israel 58-62, 164-7 
Vietnam War 57-8, 80 
United Workers’ Party see Mapam 
Urieli, Naham 100 

Wadi Salib riots 26-9 
wages 123-5 
wars 2, 166 
Attrition 44-5, 55 
Lebanon 91-8, 141-4, 148, 166 

174 Index 

Sinai 18,30, 166 
Six Day 33-7, 65 
Yom Kippur2, 64-7, 166 
Weitzmann, Ezer85, 103, 133 
welfare institutions 22, 102 
West Bank see occupied territories 
world opinion 78-82. 96, 148 

Yaari, Meir49 
Yadin, Yigael 38 

Yadlin, Asher 4, 74 
Yehuda Kook, Rabbi Tsvi 44, 85 
Yishuv, the 1,89, 107 
Yom Kippur War 2, 64-7, 166 
army failure 64-8 
government failure 68-74 
political repercussions 64-5 
Yovel, Yeremiyahu 50 

Zionism 21-2, 52-3, 79, 83, 107-9